10879 World Development Report 1981 National and International Adjustment Annex World Development Indicators World Development Report 1981 The World Bank Washington, D.C. August 1981 © 1981 by the International Bank for Reconstruction and Development / The World Bank 1818 H Street, N.W., Washington, D.C. 20433 U.S.A. All rights reserved. ISBN 0-19-502997-6 cloth ISBN 0-19-502998-4 paper ISSN 0163-5085 The Library of Congress has cataloged this serial publication as follows: World development report. 1978 [New York] Oxford University Press. v. 27 cm. annual. Published for the World Bank. 1. Underdeveloped areasPeriodicals. 2. Economic development Periodicals.I. International Bank for Reconstruction and Development. HC59. 7. W659 330.9'172'4 78-67086 11 Foreword World Development Report 1981 is ed scarcely at all. The discussion on sued relatively outward-oriented the fourth in the World Bank's energy indicates that the world's policies tended to adjust more annual series assessing key de- consumption of energy was grow- readily to external shocks. Once velopment issues. This year its ing in an unsustainable pattern again the low-income countries major focus is the international prior to the oil-price increases of emerge as having fewer options context of development. It exam- the 1970s. Some of the necessary and little flexibility to adjust. They ines both past trends and future adjustments have now been will continue to require substan- prospects for international trade, made, but difficulties lie ahead for tial amounts of aid for decades to energy and capital flows as well as most countries. As for capital come. The human. development their effects on developing coun- flows, the Report expects the bor- issues which were the focus of the tries. This is followed by an rowing needs of the middle- 1980 Report are examined in the analysis of national adjustments income countries to be met largely light of the new circumstances. to the international economy. by the commercial banking Human development is threat- In the year since the last Report system, with additional support ened during the adjustment appeared, world economic condi- by international financial insti- period, and the potential conse- tions have worsened: the prices tutions. But for the low-income quences in unnecessary human the developing countries must countries, prospective aid levels suffering are grave. Failure to deal pay for their imports, particularly are inadequate. with these problems will also have oil, have increased while their In the latter chapters of the serious consequences interna- capacity to pay for them has Report, the analysis shifts from tionally in the longer term. declined. Their export growth has the international to the national This volume represents the been constrained by the continu- level. Here adjustment problems work of many of my colleagues ing recession in the industrial of particular types of developing in the World Bank. The judgments countries. Concessional finance countries are examined and their expressed do not necessarily has stagnated; and there are signs current policies and the lessons of reflect the views of our Board of of uncertainty in the commercial their recent experience are dis- Directors or the governments they capital markets. Even under the cussed. A dozen case studies are represent. As in previous years, relatively optimistic assumptions presented to add further detail to the Report includes the World of this Report's High-case projec- the analysis of national adjustment. Development Indicators, which tions, the income gap between the The conclusions of this analy- provide tables of social and richest and poorest countries will sis are consistent with those of the economic data for more than a continue to increase; under the first section: countries which pur- hundred countries. Low case, even the number of in- dividuals living in absolute pov- erty will rise. The discussion of international trade finds that middle-income developing countries fared rel- atively well in the 1970s but that Robert S. McNamara the low-income countries benefit- June 30, 1981 'U This report was prepared by a team led by Robert Cassen and comprising Michael Finger, Norman Hicks, Frederick Jaspersen, Robert Liebenthal, Pradeep Mitra, Rupert Pennant-Rea, Christine Wallich and Oktay Yenal. The Economic Analysis and Projections Department prepared the data and projections for Chapter 2, together with their underlying analysis, and supplied information and assistance for the entire report. The team has also worked closely with members of the Policy Planning and Program Review Department and the Development Research Center. The authors would like to thank these and many other contributors, reviewers and production and support staff. The work was carried out under the general direction of Hollis Chenery. iv Contents Definitions viii 1 Introduction 1 2 A ten-year perspective 8 Growth in the 1970s 8 Prospects for the 1980s 10 Implications for poverty 16 Interdependence 18 3 Growth through trade 20 Trade in the 1970s 20 Developing-country trade policy and growth 25 Industrial-country policy 28 International cooperation 32 4 Energy: a new era 35 The energy transition 35 The special problems of traditional fuels 40 Energy and growth 42 Energy policy 43 5 External finance for adjustment and growth 49 External finance in the 1970s 50 Financial adjustment 53 Prospects 54 6 Country experience: managing adjustment 64 The oil-importing developing countries 64 Structure and policy 64 External shocks and modes of adjustment 65 Middle-income oil importers 67 Low-income oil importers 78 China: adjustment and reform 85 The need for adjustment 85 Prospects and options in the 1980s 85 The oil-exporting countries 88 The capital-deficit oil exporters 88 The capital-surplus oil exporters 91 Oil-exporting countries' prospects 93 Nonmarket industrial countries: the "intensive strategy" 94 A changing strategy 94 Relations with developing countries 95 7 Human development: a continuing imperative 97 Human development and adjustment 97 Food and nutrition 100 Population 107 The role of external assistance 110 8 Overview lii The nature of interdependence 111 Developing countries in the 1970s and 1980s 112 Global adjustment 114 Agenda for growth 117 Technical appendix 120 Bibliographical note 124 Annex World Development Indicators 129 V Text tables 1.1 Growth of GNP per person, by region, 1960-90 3 2.1 Growth of GDP in industrial countries, 1970-90 10 2.2 Growth of export volumes, goods and nonfactor services, 1970-90 11 2.3 Exports of all developing countries, 1970-90 11 2.4 Net financing flows, all developing countries, 1970-90 13 2.5 Performance indicators, oil-importing developing countries, 1970-90 14 2.6 Growth of GDP, by region, 1960-90 15 2.7 GDP growth rates, 1980-90 15 2.8 Fuel-import cost ratios, 1970-90 16 2.9 GDP sensitivity to oil-price increases, 1980-90 17 2.10 GNP per person, 1980-90 18 2.11 World production and trade, High case, 1970-90 18 2.12 Current account balances, 1970-90 19 3.1 Composition and growth of world merchandise trade, 1970-80 20 3.2 Purchasing power of exports of all major goods and nonfactor services, 1970-80 21 3.3 Developing-country shares in the apparent consumption of manufactured goods in industrial countries, 1970-78 24 3.4 Structure of merchandise trade, low- and middle-income oil importers, 1970-80 26 3.5 Import coverage of the Generalized System of Tariff Preferences, 1976 30 3.6 Increments in the volume of nonfuel trade between developing and developed countries, 1960-80 31 3.7 Export purchasing power net of fuel imports for low-income oil importers, 1970 and 1980 32 4.1 Commercial primary energy production and consumption, by country group, 1970-90 36 4.2 Index of real energy prices to final users: major industrial market economies, 1974-80 37 4.3 Typical income and long-term price elasticities for energy 37 4.4 Commercial energy consumption, 1960-90 38 5.1 Oil-importing developing countries' current account deficit and finance sources, 1970-80 49 5.2 Medium- and long-term external debt, outstanding and disbursed, 1970-80 57 5.3 Oil importers: financing current deficits, 1970-90 62 6.1 Developing-country groups 65 6.2 Balance-of-payments effects of external shocks and modes of adjustment in groups of oil-importing developing countries, 1974-78 averages 66 6.3 Percentage rate of change in the consumer price index, selected developing countries, peak of 1956-70 and mid-1970s 67 6.4 Selected capital-importing oil exporters: country characteristics 89 7.1 Central government expenditure on health and education, selected countries, 1977 or 1978 98 7.2 Foodgrain consumption per capita, 1961-79 102 Technical appendix tables T.1 Nonfuel primary exports: changes of export purchasing power and export volume by product category and by country, 1970-80 121 T.2 Purchasing power of exports of manufactured goods, increase by major country group, 1970-80 122 T.3 Balance-of-payments effects of external shocks and modes of adjustment: Kenya 122 Text figures 1.1 Three decades of progress: income, health, education, 1959-80 6 2.1 GDP, inflation and exports, by country group, 1961-80 9 2.2 Developing countries' merchandise exports, 1980 and 1990, High and Low cases 11 2.3 Developing countries' GNP per person, 1970-90, High and Low cases 17 2.4 Numbers in absolute poverty, 1980 and 2000 18 3.1 Oil-importing developing countries' purchasing power of exports, 1965-80 21 3.2 Developing countries' increases in export purchasing power, 1970-80 22 3.3 Industrial and oil-importing developing countries' nonfuel primary exports, 1970-80 22 3.4 Industrial and oil-importing developing countries' manufactured exports, 1970-80 24 3.5 Developing countries' exports to industrial countries, 1968-78 26 3.6 Industrial countries' demand for manufactures, 1970-78 30 4.1 Petroleum prices, 1950-80 and 1972-80 35 vi 4.2 Commercial primary energy consumption, 1960-90 36 4.3 Effects of income and price on energy consumption in industrial countries, 1960-90 37 4.4 Effects of income and price on energy consumption in oil-importing developing countries, 1960-90 38 4.5 Increments to world energy supply 39 4.6 Consumption of traditional and nontraditional fuels in developing countries 40 4.7 Comparative costs of production 45 5.1 Middle-income oil importers' current account deficit, 1970-80 49 5.2 Oil-importing developing countries' sources and uses of financial flows 50 5.3 External finance to developing countries, 1970, 1975 and 1978 53 5.4 Global current account balances, 1972-80 53 5.5 Sources and distribution of aid 56 5.6 Developing countries' outstanding debt, by type of creditor, 1970 and 1980 57 6.1 Capital-surplus oil exporters' oil production, 1966-79 92 7.1 World grain prices, 1966-80 102 7.2 Foodgrain production, consumption and net trade, by country group and for selected countries, 1970 and 1980 102 7.3 World grain imports, by country group, 1970 and 1980 103 7.4 Developing countries' food imports and food aid 103 7.5 Birth and death rates for selected country groups, 1950-95 108 Text boxes Some other factors: South-North and South-South 12 Capital flows: a glossary 13 Requirements for faster growth 16 International comparisons of real income 17 Tariff escalation and the growth of processing 23 Mineral investment needs 27 Multi-Fibre Arrangement 28 The Trigger Price Mechanism for steel imports 29 Agricultural protection in the European Community 33 Protection's price 33 Trees for people: a participatory solution 41 Reserves and resources 44 International hydro 45 Domestic petroleum prices 46 Improving industry's energy efficiency 47 Traffic management: two experiments 47 Workers' remittances 51 Variable interest rate debt 52 Debt indicators 58 Debt relief 59 South Korea 68 Brazil 70 Thailand 72 Jamaica 72 Managing windfall gains 74 The Philippines 76 Uruguay 77 Zambia 78 India 80 Tanzania 83 Upper Volta 84 Nigeria 90 Paying for primary education 99 Paying for primary health care 100 Poverty and human development in China 101 Food subsidies: three cases 106 Family planning programs make a difference 109 Adjustment mechanisms 118 vu Definitions The principal country groups the members of the Organisation Netherlands, New Zealand, Nor- used in the text of this Report and for Economic Cooperation and way, Sweden, Switzerland, the in the World Development Indica- Development (OECD) identified United Kingdom, the United tors are defined as follows: below (apart from Greece, Portu- States and the Commission of the Developing countries are divid- gal, Spain and Turkey, which are European Communities. ed into: low-income countries, with included among the middle- 1979 gross national product (GNP) income developing countries). The Organization of Petroleum per person of $370 and below; and This group is commonly referred Exporting Countries (OPEC) com- middle-income countries, with 1979 to in the text as industrial countries. prises Algeria, Ecuador, Gabon, GNP per person above $370. Nonmarket industrial economies Indonesia, Iran, Iraq, Kuwait, While China is included as a low- include the following developed Libya, Nigeria, Qatar, Saudi income developing country in the European countries: USSR, Arabia, the United Arab Emirates World Development Indicators, in Bulgaria, Czechoslovakia, Ger- and Venezuela. the text of the Report it is not man Democratic Republic, Hung- included in the terms developing ary and Poland. This group is Economic and demographic terms are countries or low-income countries sometimes referred to as defined in the technical notes to unless including China is specif- nonmarket countries. the World Development Indica- ically noted. Developing countries tors on pages 184 to 192. are also divided into oil exporters Organ isation for Economic Coo pera- and oil importers, as follows: tion and Development members are Billion is 1,000 million. Oil exporters comprise Algeria, Australia, Austria, Belgium, Angola, Bahrain, Bolivia, Brunei, Canada, Denmark, Finland, Tonnes are metric tons (1,000 kilo- Congo, Ecuador, Egypt, Gabon, France, the Federal Republic of grams). Indonesia, Iran, Malaysia, Mex- Germany, Greece, Iceland, Ire- ico, Nigeria, Oman, Peru, Syria, land, Italy, Japan, Luxembourg, Growth rates are in real terms Trinidad and Tobago, Tunisia and the Netherlands, New Zealand, unless otherwise stated. Venezuela. Norway, Portugal, Spain, Oil importers comprise all Sweden, Switzerland, Turkey, the Dollars are United States dollars other developing countries not United Kingdom and the United unless otherwise specified. classified as oil exporters. States. Capital-surplus oil exporters The OECD Development Assis- Symbols used in the text tables are (not included in developing coun- tance Committee (DAC) com- as follows: tries) comprise Iraq, Kuwait, prises Australia, Austria, Not available. Libya, Saudi Arabia, Qatar and the Belgium, Canada, Denmark, Fin- (.) Less than half the unit shown. United Arab Emirates. land, France, the Federal Republic n.a. Not applicable. Industrial market economies are of Germany, Italy, Japan, the 1 Introduction The external pressures on devel- national environment, their max- system, the changing pace and oping countries have shown little imum efforts can at best yield only character of international trade sign of easing over the past 12 slow progress. The world will (with its acute contrast between months. The combined current divide even more sharply between the rapid export growth of manu- account deficit of the oil-importing the haves and the have nots. factures and the much slower countries rose from $26 billion in These countries, even excluding growth of exports of primary corn- 1978 to $70 billion in 1980 and may China, have a population of well modifies), the steep rise in the rise even higher this year. Slow over 1 billion people. The 1980s flow of commercial bank loans to growth in the industrial countries therefore pose the question of developing countries: few of these is curbing demand for developing how developing countries in gen- were foreseen a dozen years ago countries' exports while the price eral can maintain or accelerate a fact which counsels caution in of petroleum (a product that now their growth; and how the poor looking at prospects in the 1980s. constitutes some 25 percent of countries in particular can find At the same time, those who quite developing countries' import ways out of an increasingly des- properly expect the 1980s to be a bills) increased over 80 percent in perate predicament. period of trial for many develop- real terms between 1978 and 1980. This fourth World Development ing countries may reflect that the While many of the better-off Report offers an integrated discus- 1970s witnessed international eco- developing countries have been sion of international and national nomic convulsions at least as able to expand exports and borrow economic policy issues. It deals serious as any that may be thought extensively in commercial mar- with the main dimensions of highly probable in the next 10 kets, for most of the poorer coun- adjustment in the global economy, years. The world economy's tries these new pressures come at their counterparts in national capacity to withstand shocks has the end of a decade in which they economies, and the interactions been severely tested. The tests have made little or no progress. between the two, The Report will were not passed with entire suc- Some countries in South Asia have thus: cess; growth slowed down and weathered the 1970s reasonably consider the prospects of the weaknesses in the trading and well. But the majority of the poor developing countries in the 1980s; financial environment have been countries of Asia and Africa suf- analyze recent experience in exposed; but parts of the develop- fered reduced growth in the 1970s, world trade, energy markets and ing world have come through participated negligibly in the international capital flows; and remarkably well. expansion of world trade and ben- examine the diverse nature of To analyze the experience of the efited from aid increases only for a country adjustment to the trans- 1970s, this Report makes use of the short period after the first oil-price formed international environ- extensive work carried out in the rise. ment. World Bank and elsewhere on the Now they face the 1980s, which Transformation is not too strong recent progress of development. have started badly for them, with a word to describe the contrast The links between domestic and no sign of change in either their between the 1960s and 1970s. Slow international policies and perfor- trade or their aid prospects. There growth and fast inflation in the mance emerge clearly. Developing is much to be improved in their industrial countries, major in- countries have to adjust to new domestic performance. But with- creases in oil prices, the break- circumstances; their effectiveness out more support from the inter- down of the fixed-exchange-rate in doing so depends critically on 1 their domestic management as with changes in the use of energy, asset and the borrower pays inter- well as on the industrial and oil- occurs in such a way as to permit est. It is possible to envisage exporting countries' domestic and world growth to return to some- numerous different patterns of international policies. thing approaching its earlier pace. current account surpluses and A second conclusion of the It may be impossible to match the deficits resulting from higher oil Report's analysis is the need for growth rates of the 1960s, but it is prices. On their own, however, durable changes in economic pol- surely possible to surpass the rec- they reveal little about the success icy. Over the past two years, many ord of the past seven years. of adjustment since that also developing countries have paid The suddenness of the oil-price depends on what happens to for part of their increased import increases and their consequences world economic growth. bills by a combination of short- for the pattern of global deficits The surpluses of one group of term borrowing and drawing on and surpluses has required an countries are by definition re- reserves. By definition, these are equally fast realignment of trade flected in the deficits of others. But temporary expedients. Certainly, and international borrowing. while the trade and financial flows developing countries will need to Much of this has taken place. which underlie them are synchro- borrow more in the future, from Expanded exports have helped nized as a whole, for individual both private and official sources. industrial and middle-income countries export earnings and bor- But many will have to take new countries to pay for their oil rowing may not match their stepsor intensify existing ef- imports. The low-income oil- desired levels of imports. Oil ex- fortsto increase exports or re- importing countries have been porters import mainly from the duce imports so as to achieve less successful, although several industrial countries, rather than smaller, sustainable deficits. For of them have enjoyed various off- from developing countries, which many of them, a principal result of setting benefits (like migrant would help them pay for their the changed external environ- workers' remittances) from the oil. And no mechanism ensures ment is to make long-needed rise in oil prices. Another part of that capital flows are distributed improvements in domestic eco- adjustment is containing energy among deficit countries according nomic management all the more demand; this was slow to start, to their balance-of-payments urgent. but has recently begun to make financing requirements. These domestic factors must headway, especially in the indus- In both trade and capital flows complement the national and trial countries. A further compo- there is an asymmetry between international measures required nent of adjustment, which takes the industrial and the developing for an orderly transition to lower even longer, will be changes in countries. Not only do the indus- deficits. Structural changes are energy supplies: the transition to trial countries pay for a large share needed to help minimize the sacri- more plentiful fuelsespecially of additional oil bills by exporting fice of near-term growth and long- coaland eventually to renewa- to the oil producers; their balance term development. In the absence ble sources. of payments is much less affected of satisfactory national action and In aggregate terms, higher oil by oil prices, and their adjustment a supportive international envi- prices can be viewed as ultimately and growth are mainly deter- ronment, there will be a deflation- requiring an offsetting transfer of mined by their own policies. The ary transition, involving severe goods from oil-importing to oil- oil exporters invest there, and and avoidable losses in output, exporting countries. An equiv- they have easier access to capital in and unnecessary human suffer- alent effect would follow from any general. The developing coun- ing and harm to development major terms-of-trade change, for tries' adjustment is more con- prospects. example, between manufactures strained: they depend heavily and primary commodities; but the on the growth and openness of Global adjustment scale and speed of the rise in oil industrial-country markets for prices give them particular signifi- their exports and on the aid and In international terms, perhaps cance. To the extent that oil export- credit institutions of the industrial the biggest change from the 1960s ers spend their new revenues, the countries for their external finan- and early 1970s is the new impor- transfer takes the form of the extra cial needs. The main force of tance of trade and financial flows imports they buy; to the extent world growth still flows from the in balancing out payments for oil. that they lend them to oil import- developed to the developing In this context, adjustment means ers, the transfer is postponed world, even if today the new trade ensuring that this balance, along the lender acquires a financial and financial links make the trans- 2 mission of economic activity in Table 1.1 Growth of GNF per person, by region, 1960-90 the reverse direction ever more GNP important. per person Average annual percentage growth Population (1980 This Report's examination of 1980 current Low case High case Country group (millions) dollars) 1960-70 1970-80 1980-90 1980-90 trade, energy and capital flows draws attention to some par- Low-income oil importers 1,166 220 1.8 0.8 0.7 1.8 ticularly important conditions for Africa (sub-Saharan) 175 260 1.7 -0.4 -1.0 0.1 Asia 991 210 1.8 1.1 1.0 2.1 the satisfactory functioning of global adjustment. They include Middle-income oil importers 735 1,710 3.9 3.1 2.1 3.4 East Asia and Pacific 183 1,242 4.9 5.7 4.3 6.0 the success of the industrial coun- Latin America and Caribbean 249 1,820 2.7 3.4 2.3 3.2 tries in mastering inflation and North Africa and Middle East 34 850 2.4 2.7 0.0 0.9 other constraints on growth, their Africa (sub-Saharan)' 87 520 1.7 0.4 0.0 0.3 Southern Europe 152 3,070 5.7 2.9 1.7 3.3 avoidance of protectionism and their support for expansion of Oil importers 1,901 790 3.4 2.7 1.8 3.1 financial flows to developing Oil exporters 482 1,060 3.8 2.7 2.9 4.0 countries from the private mar- All developing countries 2,383 850 3.5 2.7 2.2 3.3 kets. The oil-importing developing Low-income 1,307 250 1.8 1.6 1.5 2.6 Middle-income 1,075 1,580 3.9 2.8 2.2 3.4 countries need to expand exports Chinab 977 260 4.1 2.9 4.1 and make efficient use of bor- rowed capital to increase produc- Capital-surplus oil exporters 27 7,390 4.2 2.1 2.8 tive capacity, so that loans can be Industrial countries 674 10,660 4.1 2.5 2.3 3.1 serviced. In all the oil-exporting Nonmarket industrial countries, patterns of domestic economies 356 3,720 3.9 2.8 3.0 development are intertwined with Not including South Africa. policies on oil production and oil GNP for China refers to 1979; growth rate is 1970-79. prices, which affect their import demand and also weigh heavily in the global balance. And the they must receive reliable support pared to 3.4 percent in the middle- international financial institutions from the international commu- income oil importers and 3.1 per- have a key role to play in becom- nity. For the world economy as a cent a year in the industrial coun- ing more prominent in facilitating whole, a period of transition is tries (Table 1.1). international flows of commercial inevitable until the pattern of cur- Both the relative and the abso- capital. rent account balances and foreign lute gaps between the richest and Many of these adjustments indebtedness can be managed poorest countries will widen in need time. While payment for more smoothly and with less fre- the years ahead, including the gap higher oil import bills through quent need for intervention by between middle- and low-income trade and finance takes place governments and international developing countries. If nothing rapidly, borrowing has its limits, agencies. better than the lower scenario can and the resumption of sustainable be achieved, the number of people growth above recent levels re- Projections living in absolute poverty, now quires more fundamental changes The next chapter of this Report some 750 million, will increase by -control of inflation, raising pro- reviews the global prospects for about 100 million people. ductivity, new investment to the 1980s, bracketing in two sce- reflect rising energy costs. For narios what is considered a plausi- Trade low-income countries especially, ble range of developments. Be- Chapter 3 looks at developing reshaping domestic production to cause the decade has started with countries' trade and its role in raise exports, economize on very slow growth in the industrial adjustment. The great success of imports and take account of new countries, the outlook is some- the 1970s was the export perfor- energy scarcities must be a leng- what worse than was projected in mance of the middle-income, and thy process. If they are not to be last year's Report. Even under the especially the semi-industrial, forced to adjust by curbing growth higher scenario, average per cap- countries-success that is likely to rates-which for most of them are ita incomes are expected to grow continue, provided the industrial already low-and abandoning by only 1.8 percent a year in the economies do not stagnate or other development objectives, low-income oil importers, com- become more protectionist. But 3 most of the low-income countries countries; while bilateral and mul- to consider domestic questions. have participated hardly at all in tilateral aid programs initially re- Corresponding to each of the fac- the growth of world trade or in the sponded to the needs of many ets of global adjustment, national growing "South-South" trade low-income countries. The 1979-80 adjustment requires policies that among developing countries: this oil-price increases mean that over time, say in five to eight is part of the explanation for their heavy additional borrowing is years, will reduce current account current plight. Their terms of needed to avoid unacceptably low deficits to sustainable levels. This trade, even excluding oil, deterio- growth rates. But there are now means that countries must often rated badly. several causes for concern that reduce consumption below what it The chapter discusses the need were absent in the mid-1970s: would otherwise have been, and for the industrial countries to many countries have already bor- generate enough foreign exchange tackle their problems of trade rowed heavily; the banking sys- to cover the imports needed for adjustment. An open and expand- tem faces a growing number of growth by expanding exports or, ing trade environment is central to constraints; and high interest alternatively, reducing import the health of the world economy rates will increase borrowing requirements. To the extent that in the 1980s. This is true for the needs if there is to be a substantial increased financing is necessary growth of the industrial countries net transfer of funds, while shorter to avoid sudden contraction dur- as well as for developing coun- maturities will call for more ing the adjustment period, they tries, whose exports and credit- frequent refinancing. These are must be able to attract foreign worthiness are interconnected. among the reasons why middle- capital. Patterns of production and But the chapter concludes that the income countries' requirements consumption of energy must alter poorest countries will generally may not be met without the in- both so as to economize on its use not benefit much from trade creased involvement of the inter- and to encourage its domestic unless their development also national financial institutions; the supply. In a time of austerity, it is advances on other fronts. latter have in fact already begun to more than ever essential to make play a more active role. the most efficient use of scarce Energy Once again, however, it is the resources in promoting economic A range of energy issues is consid- plight of the low-income countries and social objectives. In the long ered in Chapter 4. It shows that that most requires new initiatives. term, the strategy of development the pattern of energy use and They need to borrow more and the relative rates of expansion growing demand before the especially, more rapidly disburs- of different sectors must respond 1973-74 oil-price increase was ing funds. Yet bilateral and multi- to higher energy costs and for- unsustainable and describes what lateral aid agencies have notand eign-exchange constraints. Suc- is needed to return to a sustain- on present expectations are not cessful adjustment implies achiev- able path. It underlines that the likely tocome forward on any- ing this with the minimum sacri- two critically scarce fuels in the thing like the scale that is needed. fice of income growth and without 1980s are oil and fuelwood. The And at least one of the sources of abandoning the goals of human chapter considers the economic foreign exchange which helped development and a less unequal factors governing trends in future some low-income countries distribution of personal incomes. energy prices, the changing com- through the 1970sworkers' National adjustment, like global position of total energy use, the remittancesis not expected to adjustment, takes time. The expe- implications of higher energy grow as fast as before. Unless they rience of different countries has prices for developing countries' receive more financial support, varied greatly, as Chapter 6 dem- growth prospects, and the energy and quickly, their prospects are onstrates. policies that developing countries bleak. The result can only be fur- Low-income oil importers. could adopt to reduce their vul- ther deprivation in the poorest Several have benefited both from nerability. countries, several of which have internal developmentsgood already had declining per capita harvests, successful adjustment International capital flows incomes during the 1970s. policiesand from external fac- Chapter 5 of the Report describes tors (not least those originating how, in the mid-1970s, capital National adjustment directly or indirectly from higher markets efficiently recycled the oil oil prices: more exports to the oil exporters' surpluses, particularly Having covered international producers, more aid from them, to middle-income developing issues, the Report then moves on and large workers' remittances). 4 But the majority of low-income "adjustment and reform." And it human needs are not met and countries were harmed both by examines a variety of internal and human development does not international changes (volatile, external factors which are induc- advance, that is bad enough in slow-growing demand for many ing adjustment in the nonmarket itself. But there is a further conse- countries' primary commodities, industrial economies. quence. The volumes of research aid stagnating after a brief on population in recent years upsurge in 1974-75) and by their Human development demonstrate clearly that poverty long-standing domestic weak- Last year's World Development and rapid population growth are nesses. Many were, in addition, Report was devoted largely to linked. Failed development trans- racked by war and civil strife. questions of human develop- lates directly into failure to slow Middle-income oil importers. ment. It stressed a number of the rate of world population Most of them adjusted fairly well themesthat mitigating poverty, growth. This reinforces the hard- to changed circumstances. Those improving health and nutrition, ship of developing countries in with advanced manufacturing promoting family planning, rais- one of their many vicious circles: industry and easier borrowing ing educational levels and enhanc- the population growth which opportunities could be flexible mg other living conditions were results from poverty makes the enough to expand exports and interrelated goals, important for removal of poverty more difficult. maintain growth. But a few of their own sake; and that the Nor will that hardship neces- themparticularly those that bor- investments required for these sarily be confined to developing rowed to defer rather than acceler- purposes were not just human- countries. A world of 1.5 billion ate adjustment, or took on over- itarian in their concern but made people in 1900 grew to one of ambitious new investment pro- major contributions to economic 4 billion by 1975 and will exceed gramsdid so in ways that will growth. 6 billion by the end of this century. produce problems in the 1980s. Chapter 7 of this Report restates The pressures this will bring to And the position of some of the these themes. It looks first at the every country will be considera- less well-off middle-income pri- likely impact of national adjust- ble, since all are affected by world mary producers is comparable to ment on human development demand for food and for finite that of the low-income countries. programs, which are obviously at resources, and by the dangers to The oil exporters. They com- risk at a time of budgetary strin- clean air and oceans. Failure to prise some 20 percent of the popu- gency. It argues that these pro- slow population growth substan- lation of developing countries and grams do not have to be cut, or at tially by the end of this century benefited from the changes of the least not severely; if cuts are inev- means that rapid population 1970s. For many of them, how- itable nonetheless, it suggests growth will continue in the next, ever, extra oil revenues have not how they can be effected with the and lead to an ultimate world pop- been enough to finance all their least damage to human develop- ulation of 11 billion or more instead planned investments and import ment. Unless these programs of the 8 billion at which it could be needs. And all face the particular are maintained, many more mil- stabilized. Any residual belief that difficulty of avoiding rapid do- lions will live and die in appalling industrial countries can somehow mestic inflationwhich will occur poverty. immunize themselves from the if their expansion plans run ahead Food and nutrition are exam- problems faced in the developing of productive capacity for goods or ined from three main standpoints: world will then be painfully services that cannot be imported. the relation between world food exposed. The capital-surplus oil export- supplies and measures to improve Interdependence ers have a special concern over the food security for countries and for rate of immigration which has had individuals; the conflict in domes- This last theme is one of many to accompany their new growth. tic agricultural policy between instances of interdependence For all oil exporters, there is a pre- poor people's needs for low food among issues and among coun- mium on developing human prices and the higher prices tries brought out in this Report. resources and on choosing proj- needed for incentives to farmers; The final chapter provides an ects with benefits that will outlive and international and national overview of interdependence; their oil reserves. action necessary to overcome summarizes the Report; and draws Chapter 6 also discusses recent widespread hunger. some conclusions on world eco- developments in China, which is The chapter also discusses pop- nomic prospects and the policies going through its own period of ulation issues. If food and other required to improve them. 5 Figure 1.1 Three decades of progress: income, health, education, 1950-80 Income GNP per person (1980 dollars) GNP per person (1980 dollars) 1950 1960 1980 0 1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 9,000 10,000 Industrial countries 4,130 5,580 10,660 1950 ndustrial countries Middle-income countries 640 820 1,580 Low-income countries 170 180 250 1980 Middle-income Average annual growth, 1950-80 1950 countries (percent) Average annual growth (percent) 1950-60 1960-80 Middle- 1980 Industrial ncome 4 countries Countries Industrial countries 3.1 3.3 3.2 3 Middle-income countries 2.5 3.3 Low-income 1950 1 Low-income countries Low-income countries 0.6 1.7 J countries 1 1980 Health Life expectancy at birth (years) 5 75 million people Industrial Life expectancy at birth (years) countries Increase 1950 1950 1960 1979 1950-79 1979 Industrial countries 67 70 74 7 Middle-income countries Middle-income 1950 countries 48 53 61 13 Low-income 1979 mu sums mis countries 37 42 51 14 Low-income Nonmarket countries 1950 uusiussuuussuusul countries 60 68 72 12 1979 1515$ sum titus Ii $.*iiii5ii$ 0 10 20 30 40 50 60 70 80 Education Adult literacy in middle- and low-income countries (percentage) $50 million adults Adult literacy rate (percentage) 1950 1950 1960 1976 Literate Industrial countries 95 97 99 Illiterate ,usuIuu,w Middle-income countries 48 53 72 1976 Low-income Literate countries 22 28 39 Nonmarket countries 97 97 99 Illiterate "sn's,,"' Note: All tables exclude China. 0 20 40 60 80 100 Challenge of development economic development has been a almost two-and-a-half times formal policy goal for only a rela- in real terms during the past Future goals must be judged in the tively short time; yet considerable 30 years, from some $640 in 1950 light of past achievements. In strides have already been made. (1980 dollars) to $1,580 in 1980. In many countries, independence Among the middle-income coun- the low-income countries, per came less than 20 years ago and tries, GNP per person has risen capita incomes rose by less than 6 one-half, from $170 (1980 dollars) food production. Many mkdle- growth with equity and sustained in 1950 to $250 in 1980; a gain of income countries owe a considera- human development? Will the only $80 per person in 30 years ble part of their growth to expand- international environment com- though in the great majority of ing output and exports of man- plement their efforts? But some of them, significant gains have ufactures. Yet in the low-income the answers and the facts that nonetheless been made in combat- countries manufacturing accounts underlie them are new. In a certain ing illiteracy, in improving educa- for only 13 percent of GNP, and sense, the 1970s may be remem- tion and health, in lowering mor- that is only two percentage points bered for giving a new shape to tality and fertility. higher than it was 20 years ago. the world economy. This is not the By contrastand it is a stark This does not imply that low- product of the search through contrastin that same 1950-80 income countries cannot pro- negotiation for greater equality of period the average income per gress. Being a low-income country economic opportunity among person in the industrial countries is not an immutable fact; it is a nations which the developing increased by over $6,500 (Figure statistical category. The middle- countries have pursued; little 1.1). These income figures should income countries were poor once progress has been made along that not be taken too literallyto themselves; some are still only route. Rather, what has evolved is reflect purchasing power dif- narrowly above the line which a different pattern of economic ferences, those for developing separates them from the low- power, with new centers of pro- countries should be adjusted income countries. Some, duction, finance and trade, and upwards by a factor of 2 or however, have advanced from a new forms of interdependence. more. Nevertheless, the contrast low starting point with striking The result has been both severe remains. speed even in the past two difficulties and favorable oppor- Not surprisingly, most develop- decades; and several low-income tunities for the developing world; ing countries regard industrializa- countries have reasonable pros- the 1980s will determine whether tion itself as the main path to pects of raising their incomes sub- the opportunities can outweigh prosperity, so much so that many stantially in the years to come. the difficulties, even for the of them have paid insufficient Thus the questions of this Report poorest countries. attention to complementary pri- are old questions: how can mary production, particularly developing countries achieve 7 2 A ten-year perspective The 1980s have begun on a slug- tailed analysis in the next three averaged only 3.3 percent a year. gish note. Growth in the indus- chapters. But the developing Aggregate output fell in 1974-75; trial market economies as a group countries' domestic policies also although it then recovered, the slowed down sharply in 1980 and affect their performance. Their steady growth of the 1960s has not will remain slow in 1981 as well. achievements in boosting saving been resumed. Of all the different These countries show few signs of and investment; in making effi- country groups, the industrial overcoming the inflationary cient use of their capital and countries have fallen farthest be- legacy of the 1970sjust one of human skills; in expanding low their earlier trend. several similarities between the exports and economizing on The reasons for this perform- two decades. Others include ris- importsall these, as Chapter 6 ance are both familiar and com- ing real oil prices; continuing large demonstrates, have powerfully plex and can be reviewed only trade deficits and, consequently, influenced their record in the past, briefly here. The problems of the heavy borrowing from abroad by and will continue to do so. 1970s were rooted in the late 1960s. the developing countries; and the In practice, national and inter- At that time, several European prospect of much slower growth national factors are connected. economies experienced rapid in low-income countries than in With a favorable external environ- wage inflation. In the United middle-income countries. ment, developing countries may States major new social programs The 1980s will not, however, be a find it easier to make internal and the Viet Nam war raised straight rerun of the 1970s; the adjustments. On the other hand, government spending substan- contrasts between the two could the degree to which the external tially, with no additional taxation be almost as significant as the environment deteriorates will to finance it. Slowing productivity parallels. For example, the price of determine the scope of internal growth in American agriculture energy in real terms is unlikely to adjustment required. For exam- and manufacturing also made its fall in the 1980s as it did in the last ple, a slight increase in current first appearance in the mid-1960s. half of the 1970s. The reality of account deficits can be covered by Corrective measures led to a higher energy prices has been external borrowing in the short mild recession in the industrial accepted and the need to make and medium term, but a larger countries in 1970-71but infla- adjustments recognized by most deficit will require more funda- tion did not slow down. Later, countries. Many of the lessons of mental changes over the longer expansionary policies produced a the 1970s have now been learned term. These links are incorporated sharp recoveryand another so that countries may adjust more in the projections contained in this surge in inflation. As a group, effectively, and with less loss of chapter. these countries experienced dou- growth, than they did before. ble-digit inflation for the first time This chapter highlights the Growth in the 1970s in 1972, with a further rise in 1973. international influences on de- Stagflation had been born, with veloping countries. The various The industrial countries grew at just successive peaks of activity at ever projections and assumptions it over 5 percent a year in the 1960s higher unemployment levels and makes about the three most and, until the last years of the a seeming disappearance of the important of those influences decade, experienced relatively lit- "trade-off" between inflation and trade, energy and external tle inflation or unemployment. unemployment. financeare drawn from the de- Their erratic growth in the 1970s Growth in many economies 8 was pushing against a ceiling, Their most successful short-term both physically and in terms of adjustmenta sharp rise in their Figure 2.1 GD!', inflation and exports by country group, 1961-80 the increasing difficulty of resolv- exports to the oil exporterswas dwarfed by the effects of slower Industrial countries' GDP and exports ing competing claims for the fruits Annual percentage change, constant prices of the growth. Certainly, the rela- economic activity. 20 - tion between growth and energy The slowdown in productivity use was untenable and had to be growth now affected not just the corrected. Some commentators United States but Europe and even suggest that a longer cycle Japan as well; and few countries has been in progress, involving managed to curb inflation other a fundamental slowdown in than by severely reducing their technological innovation and growth. Inflation became the investment. central issue of economic policy. The 1973-74 rise in oil prices Governments started paying threw the industrial countries into more attention to supply factors, further disarray, because: fearing that boosts in demand 5Lt I I Oil-importing developing countries' exports The contractionary effect of the would raise prices, not output, if Annual percentage change price increase, on top of restraint productive capacity was growing 40 - imposed to curb the excessive slowly. At the same time, invest- expansion of 1972-73, halted ment resources had to be used to economic growth in 1974-75. replace capital stock made obso- The unpredictability of future lete by the changes in energy oil prices induced a mood of great prices, reducing the potential uncertainty both for private inves- increase in productive capacities. tors and for government fiscal and After falling by 9 percent be- monetary managers. tween 1975 and 1978 in real terms, The oil-price increase itself oil prices rose 83 percent in added to inflationalthough by 1979-80. In percentage terms, this how much is controversial. At was less than half as large as the 20Ll I I I I I lilt II Oil-importing developing countries' GDP least in the countries where infla- increase of 1973-74. But because Annuat percentage change tion was moderate, rising oil oil had a larger weight in total 15 prices did not impart a major extra spending by 1979, the size of the inflationary impetus (Figure 2.1). "oil transfer" was on each occasion 10 - Middle-income The marked slowdown in the about 2 percent of the industrial industrial economies in the mid- countries' GDP. It is still too early 1970s led to a relatively quick re- to be sure how the industrial turn to current account balance. countries will respond this time. In 1974 they had run a collective Certainly, they have managed to deficit of $8 billion; by 1978 this avoid as severe a fall in output as had been converted to a surplus of they had experienced in 1974-75. Low-income (excluding India( $30 billion. Yet reduced deficits are Investment has not fallen as not themselves evidence of suc- much. Their combined current 51961 63I I I 65 I t i 67 t 69 i I i 71 i 73 i i I 75 i i 77 i 79 cessful adjustment; if they are account deficit has not been com- achieved simply by slowing down ing down as quickly as it did in activity, they underwrite the con- 1974-75. Finally, it is clear that the tractionary effect of higher oil industrial economies have been The progress of developing coun- prices. That was the main result of becoming more economical in tries has been influenced both by the industrial countries' post-1973 their use of oil (Chapter 4). the external environment and by response to more expensive en- Coupled with a growing supply of their domestic policies. For the oil ergy. They were slow to start energy from domestic sources, exporters, where one-fifth of the economizing on their use of oil, this meant that in 1980 they population of developing coun- even though their earlier rapid imported only 18 percent more oil tries lives, the 1970s were a period growth of consumption had itself than they did in 1970, despite the of rapid growth. Some developing contributed to price increases. 37 percent rise in their real GNP. countries also obtained indirect 9 benefits from higher oil prices- attempts at precise forecasts but in industrial countries need to make by increasing their exports to the terms of scenarios that span the structural adjustments in order to oil producers or from remittances range of reasonable expectations. boost productivity growth, econo- of migrant workers or from aid This Report therefore follows last mize on energy and stimulate its from the oil producers. year's approach in presenting its production. Most important of all, As a group, oil importers were projections in the form of High they need to find some way of con- affected in two main ways by the and Low cases. In addition, it taining inflation while growing events of the 1970s: examines the sensitivity of these fast enough to reduce unemploy- Their current account deficit projections to external factors and ment. widened, from $7 billion in 1973 to departures from present trerds. The High case reflects a view $33 billion in 1974 and $39 billion The projections posit smoothly that the industrial countries will in 1975 (5.2 percent of GNP). It continuous activity, not the be relatively successful in meeting then fell to $26 billion by 1978 as bumpy experience of the real these challenges (Table 2.1). If so, the industrial countries recovered world; they are therefore con- growth will recover significantly and the developing countries cerned with the average rates of in the second half of the decade, expanded their exports. But the change over the decade, not year- from 3.3 percent a year in 1980-85 1979-80 oil-price increase and to-year movements. (While 1980 is to 4.0 percent a year in 1985-90. slower growth in the industrial treated as an actual year in the This would still be considerably economies boosted the develop- following discussion, in fact many below their 1960s' average of 5.1 ing countries' current account of the data, particularly for percent but about equal to their deficit to $44 billion in 1979 and $70 developing countries, are based performance in the early 1970s. billion in 1980 (4.5 percent of on estimates or projections.) If the industrial countries fail to GNP). Preliminary estimates indi- make the necessary adjustments, cate that it may remain at about Growth in industrial market and their growth is likely to be closer to non market economies this level in 1981. that of the Low case. Under this Their growth slowed down, The industrial countries are an scenario, recovery is somewhat but there were marked differences important influence on the slower in the first half of the 1980s. between the low-income and the economic health of the developing Continuing difficulty in mastering middle-income countries. Per world. The impact of the oil-price macroeconomic problems, and capita growth rates in the low- increase contributed to a fall in possible external disturbances, income countries were more than their growth rates to only 1.4 then restrain the average rate of halved (from 1.8 percent in the percent in 1980, well below the growth for the 1980s to only 2.8 1960s to 0.8 percent in the 1970s). 3, percent annual average in percent a year (compared with 3.6 However, with the exception of 1970-78. Their recession has prob- percent in the High case). certain African countries, the mid- ably now bottomed out, and The international environment dle-income oil importers grew recovery will begin in late 1981 or will also affect the nonmarket strongly throughout 1960-80. early 1982. economies, though to a lesser Their manufacturing growth This recession has not been, and extent. Given the labor-supply averaged 7.6 percent a year in the the recovery is not projected to be, and energy constraints that many 1960s and 6.8 percent a year in the as sharp as in the mid-1970s. The of them are experiencing, they will 1970s. Allowing for population growth, their performance com- pares favorably with that of the Table 2.1 Growth of GDP in industrial countries, 1970-90 industrial countries. GNP per (average annual percentage change) person in the middle-income Actual Projected countries rose 3.6 percent a year High case Low case in the 1960s and 3.1 percent a year Country group and region 1970-80 1980-85 1985-90 1980-90 1980-85 1985-90 1980-90 in the 1970s, compared with 3.9 Industrial market percent and 2.4 percent in the economies 3.3 3.3 4.0 3.6 2.6 3.0 2.8 industrial countries. North America, Japan, Oceania 3.6 3.6 4.2 3.9 2.9 3.2 3.1 Western Europe 2.8 3.0 3.6 3.3 2.2 2.7 2.4 Prospects for the 1980s Nonmarket industrial The future is best explored not by economies 4.8 4.0 3.8 3.9 3.8 3.6 3.7 10 Table 2.2 Growth of export volumes, ufactured goods, however, the goods and nonfactor services, 1970-90 Low case also presumes increased (average annual percentage change) protectionism, so that the share of High case Low case developing-country exports in the Origin 1970-80 1980-85 1985-90 1980-90 1980-85 1985-90 1980-90 industrial countries' consumption World exports 5.3 5.0 6.4 5.7 3.5 3.8 3.7 of manufactured goods remains Developing fixed. countries' 4.7 5.9 8.2 7.0 3.7 4.2 3.9 This would have a dramatic Oil importers 6.3 6.8 9.5 8.2 4.0 4.7 4.3 effect, reducing the growth in Oil exporters 1.6 3.6 4.0 3.8 3.1 2.8 2.9 developing countries' manufac- Industrial tured exports from 12.2 percent a countries 5.5 4.9 6.2 5.5 3.5 4.0 3.8 year in the High case (much the Memo item same as the average for the 1970s), Industrial to only 5.1 percent in the Low case countries' imports 4.3 3.9 5.8 4.8 2.6 3.4 3.0 (Table 2.3). This combination of a. Excludes China. slower OECD growth and in- creased protectionism results in find it hard to grow as rapidly as Conversely, slow growth is less a trade growth rate significantly the 4.8 percent a year average of likely if protection is avoided since below the trends of the 1970s. the 1970s. They are projected to protection itself would reduce the Developing-country exports are grow by 3.9 percent a year in the incentives that promote techno- not wholly dependent on indus- High case and 3.7 in the Low. On logical innovation and produc- trial-country growth and trade past evidence, their performance tivity improvements. The interac- policies. Trade among developing barely affects the developing tion between growth and protec- countries has grown since 1973, a countries. tion is discussed in more detail in large part of which involved Chapter 3. exports from the oil importers to TRADE. Two important influ- The High case projects world the oil exporters. South-South ences on world trade in the export growth of 5.7 percent a year trade will become even more 1980s, as in the 1970s, will be in the 1980s; the Low case sees important in the future as these growth in the industrial countries only 3.7 percent a year (Table 2.2 countries' imports continue to and the nature and extent of pro- and Figure 2.2). For the develop- grow rapidly (see box, overleaf). tectionism. Both factors are ing countries, exports are ex- The demand generated by the oil linked. Slower growth will not pected to average 7.0 percent producers affects not only visible only limit demand for developing- growth in the High case and 3.9 country exports but could also percent in the Low case. increase pressures for greater For primary goods and services, protection-particularly against the sluggishness of the Low case is Figure 2.2 Developing countries' manufactures-as unemploy- the result purely of slower indus- merchandise exports, 1980 and ment in industrial countries rises. trial-country growth. For man- 1990, High and Low cases Billions of 1978 dolla,s 700 - Table 2.3 Exports of all developing countries, 1970-90 600 - Hgh case Growth rate Value (average annual 500 - (billions of 1978 dollars) percentage change) 400 - Low ca e 1990 Export composition 1980 High Low 1970-80 High Low 300 - Merchandise, total 264.4 550.3 386.4 4.6 7.6 3.9 200 - Manufactures Nonfuel primary 88.9 131.6 123.6 3.9 4.0 3.4 Nonfuel Fuels 73.0 105.3 98.0 0.0 3.7 3.0 100 - primary Manufactures 97.4 308.3 159.6 12.9 12.2 5.1 Fuels 96.5 162.3 144.9 5.0 5.3 4.2 0 Services 1990 1980 1990 Goods and services' 360.9 712.6 531.3 4.7 7.0 3.9 a. Nonfactor services only. 11 capital flows will grow less rapidly Some other factors: South-North and South-South in the 1980s than they did in the The projections presented in this chapter South-South trade is projected to increase 1970s. As Chapter 5 shows, the mainly show the impact of the behavior of (in the High case) from 7 to 9 percent of commercial banks have already industrial and oil-exporting economies world trade between 1980 and 1990. More lent heavily to the developing on the developing countries. The growth importantly, South-South trade will countries, and may therefore be and performance of the latter, however, increase as a share of total exports of the will also have an important influence on South from 27 to 32 percent. Much of this more reluctant than before to the trade and growth performance of the increase is accounted for by the exports of increase their exposure. In addi- industrial countries. In other words, primary products to both the oil exporters tion higher interest rates have there are important flows from South to and the semi-industrial countries. South- discouraged some potential bor- North as well as from North to South. South trade in primary products is pro- While these "feedback effects" are weaker jected to increase from 8 to 11 percent of rowers. Some of the largest bor- and more difficult to estimate, it has been world trade. On the other hand, South- rowers face problems of debt estimated that policies which raise South trade in manufactures is expected management that may deter them developing-country growth by 1 percent, to remain at about 5 percent of world from increasing their debt so are likely to "feedback" on the growth rate trade during the decade. The easing of much again. The oil exporters will of the OECD countries so as to increase trade restrictions between developing again have the capacity to borrow, their growth by about 0.1 to 0.2 percent countries could result in a significant (which in turn would have a further small increase in trade and growth and help but possibly less need to do so effect on the developing countries). offset the adverse influence of more slug- than in the 1970s. Another missing element in the discus- gish OECD growth. The High case projects noncon- sion is the fact that not all developing- cessional capital flows increasing country exports go to the industrial coun- Trade Flows tries; there is a significant and growing (percentage of world trade) at about 10 percent a year during amount of South-South trade in today's Year From/to North South Total the 1980s, and about 5 percent in world. The matrix gives some very the Low case, net of repayments. approximate figures for the shares of 1980 North 50 24 74 South 19 7 26 Since inflation is assumed to aver- world trade between the "North" 69 31 100 age 7 percent a year, the real trans- industrial market and nonmarket econ- omiesand the "South," which includes 1990 North 51 21 72 fer would fall in the Low case. both developing and capital-surplus oil South 19 9 28 These projections may prove too exporters. These matrices show that 70 30 100 low if developing countries can improve their debt-servicing capacity by higher exports. No allowance has been made, trade but also the export of certain countries takes the form of hous- moreover, for a bigger lending role services, such as construction. In ing and other construction. for the International Monetary addition, many developing coun- Foreign capital often provides the Fund (IMF). tries earn considerable foreign essential imports of machinery Net disbursements of Official exchange from remittances sent and materials that make other Development Assistance (ODA) back from migrants to the oil-pro- domestic investments possible. from all donors in 1980 were $35.4 ducing countries. There is considerable uncer- billion, of which $26.6 billion came tainty about the amount of from DAC donors. The latter CAPITAL FLOWS. The impor- commercial capital developing represents a level equal to 0.37 tance of foreign capital for devel- countries will be able or willing to percent of the combined GNP of opment is difficult to estimate borrow in the 1980s (Chapter 5). the DAC countries, compared precisely. For all oil importers dur- The prospects for world output with an average for the previous ing 1975-78, net transfers of and trade themselves interact five years of only 0.34 percent. For foreign resources (the "resource with the capital forecasts. Faster the High case, it is assumed that gap"see box, page 13) totaled growth in the industrial countries this higher level of 0.37 percent is 3.7 percent of GDP, compared to would boost developing coun- maintained through 1990; for the investment rates of about 24 per- tries' exports and terms of trade Low case a decline is projected to cent of GDP. Foreign capital and therefore their ability to 0.33 percent. ODA from OPEC therefore financed nearly one- contract and repay commercial countries is assumed to rise from seventh of total investmenta sig- debt. It could also encourage $7 billion in 1980 to $15 billion in nificant, but not dominant, contri- industrial countries to increase 1990 in both cases. While net bution. On the other hand, most their aid (Table 2.4). disbursements from all donors gross investment in developing This Report assumes that private amounted to over $35 billion in 12 1980, the actual receipts of ODA by developing countries were about Capital flows: a glossary $22 billion. The difference be- Confusion often arises over the definition difference between gross domestic tween these two figures is of such terms as trade balance, resource investment and saving. Countries with a accounted for by technical assist- balance, resource gap and the current negative resource gap (or positive ance flows which are not recorded account balance. In this Report they are resource balance) save more than they defined as follows: invest and transfer resources abroad. in the balance of payments, and Trade balance. Exports of goods minus Current account balance. In the stan- contributions to multilateral orga- imports of goods, or the balance on dard definition, as used by the IMF and nizations which have not been merchandise trade. others, this is equal to the resource disbursed or which form the capi- Resource balance. Exports of goods and balance plus net factor income, plus net tal base for nonconcessionary nonfactor services minus imports of transfers, both private and official. goods and nonfactor services. Essentially, Because of interest payments on loans, lending. On this basis, the pro- the trade balance plus the balance on developing countries typically make net jected total ODA inflow for trade in services (such as tourism, ship- factor payments abroad, so their current developing countries would range ping), but excluding factor payments account deficit is larger, in a negative between $54 and $66 billion in (such as interest, workers' remittances sense, than their resource balance. It is 1990, depending largely on GNP and dividends). the Bank's practice, however, to exclude Resource gap. Imports of goods and official transfers from the current account growth in the OECD countries. nonfactor services minus exports of deficit. Since these are composed largely The High case also assumes a con- goods and nonfactor services, or the of official development assistance siderable reallocation of ODA, so resource balance with the opposite sign. received in grant form, it is more appro- that 50 percent of it goes to the low- This gap constitutes the net transfer of priate to treat them as a means of financ- income countries by 1990, com- resources from abroad and is equal to the ing current account deficits. pared with the present 34 percent. The High case thus incorporates a fair degree of optimism about in the 1980s, or 10 percent a year in age annual increase. That is con- ODA for low-income countries. nominal terms. This would raise sistent with the range of growth the OPEC average price from rates projected for the industrial ENERGY. Energy prices remain $30.50 a barrel in 1980 to $42 a bar- countries and the likely avail- one of the key uncertainties affect- rel (in 1980 dollars) in 1990. ability of energy supplies. It has ing growth prospects. On the evi- A smooth upward trend in therefore been used for both Low dence discussed in Chapter 4, real petroleum prices is not meant to and High cases. In the Low case, petroleum prices are likely to imply that they will not fluctuate, demand for oil is reduced, but it is increase at some 3 percent a year but that 3 percent will be the aver- assumed that oil producers would Table 2.4 Net financing flows, all developing countries, 1970-90 (billions of dollars, current prices) Growth rates' Projected' (percentage) Actual High Low 1980-90 Source 1970 1980 1985 1990 1985 1990 1970-80 High Low Official Development Assistanceb 4.1 21.7 40.9 65.7 35.3 53.6 18.1 11.7 9.5 Nonconcessional loans Official 1.2 8.1 13.1 22.0 12.3 18.7 21.0 10.5 8.7 Private 6.0 36.9 54.7 94.6 38.8 55.2 19.9 9.9 4.1 Direct investment 2.5 8.6 15.7 24.4 13.6 19.4 13.2 11.0 8.5 Total' 13.8 75.3 124.4 206.7 100.0 147.0 18.5 10.6 6.7 Total, 1978 prices 29.5 62.7 70.5 87.5 56.6 62.2 7.8 3.2 -0.2 Memo item Net exports (goods and services) -8.5 -52.0 -67.2 -128.3 -55.9 -92.1 19.9 9.5 5.9 Net exports (1978 prices) -18.2 -43.3 -38.1 -54.3 -31.6 -39.0 6.7 4.5 1.1 Current account balanced -10.9 -68.6 -95.4 -173.4 -84.4 -129.6 18.4 11.5 8.2 DAC-ODA: GNP (percentage) .34 .37 .37 .37 .34 .33 Note: All items net of repayments. C. Excludes short-term capital and reserve changes. a. Average annual percentage change. d. Exdudes official transfers. b. Includes ODA grants (official transfers). e. Deflated by OECD GDP deflator. 13 restrain their production to match Table 2.5 Performance indicators, oil-importing world demand, so that the real developing countries, 1970-90 (percentage of GDP) price would be maintained. High Low Developing-country performance Item 1970 1975 1978 1980 1985 1990 1985 1990 In the 1970s developing countries Constant (1978) prices adjusted in different ways to a Fuel imports, net 3.3 2.6 2.8 2.7 2.5 2.3 2.6 2.1 world of moderate growth in out- Nonfuel imports 21.8 21.0 19.9 20.2 20.4 23.8 17.9 18.4 put and trade and rising real Exports 19.2 19.7 21.1 21.6 23.5 28.0 21.7 22.1 energy prices. In the 1980s they Savings 19.9 19.2 20.8 21.5 21.7 21.9 20.7 21.1 face a similar need to adjust. Their Current prices performance will depend on sev- Current account eral factors, including their ability deficit 2.4 5.1 2.3 4.4 3.2 3.0 2.9 2.4 to increase the inflow of external Fuelimports, net 1.0 2.9 2.8 5.2 5.8 6.1 5.9 5.6 capital and to raise the rate of a. In constant 1978 prices, this ratio reflects the relationship between the volume of produc- domestic saving in order to tion and the volume of oil imports. finance investment aimed at restructuring their economies. Also of critical importance will be of concessional capital, means that 4.5 percent (Table 2.6). While their success in increasing export they will have to rely less on for- countries adjust, growth is con- growth and reducing dependence eign borrowing. In the High case, strained. In the High case, it on imported oil, capital goods and increased domestic saving sub- regains its pace of the 1960s and raw materials. stitutes partially for foreign capi- early 1970s. In the Low case, Table 2.5 summarizes the dif- tal, and exports increase from growth remains below historical ference between the High and some 21 percent of total value averages throughout the decade. Low cases in terms of some mac- added in 1978 to about 28 percent Average growth rates for all roeconomic indicators. For oil by 1990. Combined with the sav- developing countries conceal the importers the ratio of net fuel ings on fuel imports, the oil likely diversity of experience imports to GDP (both in constant importers manage to absorb the between groups of countries, as prices) declined from 3.3 percent impact of higher oil prices while well as individual countries. The in 1970 to 2.7 percent in 1980; it is reducing their dependence on for- oil exporters, for instance, are assumed to fall to about 2 percent eign capital inflows. expected to grow reasonably fast by 1990.1 That will require consid- The Low case takes a less favora- in both High and Low cases. Their erable efforts of conservation, and ble view on all these counts. As a oil exports help to insulate them substitution of domestic for im- share of GDP, exports remain from the external influences that ported energy. Historically en- roughly at their 1980 level, as does affect the oil importers. On the ergy consumption has increased domestic savings. Poorer domes- other hand, the sub-Saharan more quickly than GNP when tic performance affects credit- African countries will grow by countries are industrializing and worthiness, and thus limits the only about 3 percent a year, even urbanizing. supply of foreign capital, and in the High case. In the Low case, The oil importers have so far imports have to be cut to reduce their GNP is likely to grow less responded to the 1979-80 oil-price current account deficits. Inevita- rapidly than their population, and increases by raising their foreign bly, the cost of this squeeze is below what was achieved in the borrowing. The current account slower growth. 1970s. These countries face diffi- deficit rose from 2.3 percent of cult problems arising from both GDP in 1978 to 4.4 percent in 1980. PROJECTED GROWTH, DEVELOPING external events and such internal In the longer term, however, their COUNTRIES. The overall effect of factors as poor original resource rising debt-service burden, cou- all these different influences sug- endowment and weak domestic pled with the limited availability gests that developing countries policy formulation. could improve on their record of On the other hand, the middle- 1. In constant 1978 prices, this ratio reflects the 1970s, when they grew at 5.1 income oil importers, with their the relationship between the volume of pro- percent a year. In the 1980s the duction and the volume of oil imports. In better resource endowments and current prices the ratio is 5.2 percent in High case projects about 5.7 per- more open trade policies, are 1980. cent a year, the Low case about expected to do better than the low- 14 income countries. Their overall Table 2.7 GDP growth rates, 1980-90 growth rates are likely to average (average annual percentage) between 5 and 6 percent a year, Lower OECD growth with those in the East Asia region Lower plus lower Country group High case OECD growth capital flows Low case perhaps reaching as high as 8 per- cent in the High case. As a result, Oil importers 5.4 5.0 4.8 4.1 the disparity in per capita incomes Low-income 4.1 4.1 3.7 3.0 Middle-income 5.6 5.1 5.0 4.3 between the low-income and mid- Oil exporters 6.5 6.5 6.5 5.4 dle-income countries will widen in either the High or the Low case. All developing countries 5.7 5.4 5.3 4.5 Assumptions SENSITIVITY TO WORLD GROWTH. OECD growth, The relative importance of the 1980-90 3.6 2.8 2.8 2.8 various factors affecting the Resource gap, 1990 developing countries' perform- (billions of 1978 dollars) 54.3 54.3 39.0 39.0 ance can be roughly gauged by further simulations of the world economy. Table 2.7 indicates the impact of slower OECD growth inability to finance the required environment. These projections, and reduced capital inflows on the imports. The balance of the dif- therefore, should be taken only as High case projections. These sim- ference between this simulation illustrating the relative importance ulations indicate that, if the OECD and the Low case is a result of the of certain factors affecting growth. countries achieve only the growth assumptions of greater protec- The future is always uncertain, projected in the Low case, this tionism in the Low case plus and it is possible that the projec- could slow the oil importers' poorer performance in the devel- tions of OECD growth and capital growth from 5.4 to 5.0 percent a oping countries themselves. flows themselves could be too year. The effect on the middle- Naturally, these simulations low. It is therefore possible to income oil importers is greater only indicate what might happen envisage circumstances in which than on the low-income countries given certain changes in the the High case might be exceeded because of their greater depend- assumptions of the underlying (see box, overleaf). ence on exports to the industrial model. They do not consider pos- countries. If in addition the capital sible offsetting effects: for exam- CAPITAL REQUIREMENTS FOR flows of the Low case are as- ple, better performance in the FASTER GROWTH. The low- sumed, the growth rate of the oil developing countries themselves income countries in particular, importing countries would fall to could raise their growth, even and the oil importers in general, 4.8 percent a year because of their with a deteriorating external could be helped by a larger inflow of ODA. While ODA is a relatively Table 2.6 Growth of GD?, by region, 1960-90 small part of the total resources (average annual percentage) available to all developing coun- High Low tries, it accounts for about 14 per- 1960 1970 1980 1985 1980 1980 1985 1980 cent of the low-income countries' 80 85 90 90 85 90 90 Region 70 investment and about 20 percent Oil importers 5.7 .5.1 5.0 5.8 5.4 3.8 4.4 4.1 of their imports. Low-income oil importers 4.2 3.0 4.0 4.3 4.1 2.8 3.2 3.0 To move the low-income coun- Sub-Saharan Africa 4.0 2.4 3.0 3.0 3.0 1.8 2.0 1.9 tries from the 3-percent-a-year Asia 4.3 3.2 4.2 4.6 4.4 3.0 3.5 3.2 growth of the Low case to the 4.1 Middle-income oil importers 6.2 5.6 5.2 6.1 5.6 4.0 4.7 4.3 percent of the High case would Sub-Saharan Africa' 4.1 3.5 3.0 3.3 3.1 2.7 3.0 2.8 6.5 6.4 require additional ODA of about East Asia and Pacific 7.9 8.2 7.8 8.5 8.1 6.3 Latin America/Caribbean 5.3 6.0 5.1 6.0 5.6 4.4 4.8 4.6 $30 billion in 1990 at current prices Middle East, North Africa 4.1 4.9 4.1 4.1 4.1 3.0 3.3 3.2 or about $15 billion at 1980 prices. Southern Europe 7.0 4.6 4.3 5.0 4.6 2.5 3.5 3.0 That extra $30 bfflion would come Oil exporters 6.5 5.2 6.2 6.8 6.5 4.9 5.9 5.4 on top of the $54 billion projected All developing countries 5.9 5.1 5.3 6.1 5.7 4.1 4.9 4.5 in the Low case. It would require a. Excludes South Africa. OECD donors to raise their aid to 15 total exports in 1970 to 26 percent Requirements for faster growth in 1980. For the future, efforts at Several factors could boost the develop- rate of real capital inflows (the resource conservation and substitution will ing countries' growth above the rates pro- gap). This would produce real transfers of tend to slow the rise in the volume jected in the High case. For example, the capital of $83 billion in 1990, as opposed to of fuel imports, but this will be level of capital flows, particularly from $54 billion in the High case. Reducing the private sector, may be considerably offset somewhat by the expected protectionism is assumed to have the higher than expected; and the industrial effect of raising export-growth rates by real increase in prices. As a result, countries could reduce or eliminate non- one percentage point a year. While this the fuel-import ratio may come tariff barriers that restrict the volume of implies an easing of barriers for both down only slightly by 1990-and developing-country exports. Neither manufactures and agricultural corn- in the Low case, would actually development is probable, but neither are modities, the benefits go largely to the increase (Table 2.8). they outside the bounds of possibility, middle-income countries. The overall The table shows what their effects effect would be to boost growth in the oil- Under these circumstances, the might be. The second column illustrates importing developing countries by an developing countries will still be the consequences of doubling the growth extra half-percentage point a year. affected by changes in energy prices. If petroleum prices were to Projected GDP growth, 1980-90 rise at 5 percent a year in real terms (average annual percentage change) throughout the 1980s, the oil Higher capital importers' GDP might grow by Higher flows plus reduced Country group High case capital flows protectionum some 0.5 percentage points a year Oil importers 5.4 5.6 5.9 less. On the other hand, if real oil Low-income 4.1 4.5 4.5 prices did not rise at all, their GDP Middle-income 5.6 5.9 6.2 might grow by 5.8 percent a year Oil exporters 6.5 6.5 6.5 instead of the High case's 5.5 per- All developing countries 5.7 5.9 6.1 cent a year. Of course, changes in Memo item oil prices have an important effect Resource gap, 1990 on such things as growth and (1978 billion dollars) 54.3 83.1 83.1 Export growth inflation in the industrial coun- (average annual tries and the size of the oil export- percentage change) 7.0 7.0 8.0 ers' surpluses, which in turn affect the developing world. These secondary effects are not included in the growth estimates shown in 0.50 percent of GNP, compared large share of any increased ODA Table 2.9. with the 0.33 assumed in the Low flow would have to be in the form case. That may appear a substan- of rapidly disbursing assistance. Implications for poverty hal increase, considering recent The projections, however, do not trends, although in fact it would distinguish these two kinds of for- Regardless of whether the High or only restore the 0.49 percent of eign assistance needs. Low case prevails, large dispar- GNP achieved in 1965. ities of income between develop- Alternatively, the needs of the ENERGY-PRICE SENSITIVITY. ing and industrial countries will low-income countries could be Despite conservation efforts in remain. In 1980, income per per- met by a substantial increase in developing countries, energy son in the industrial countries was their present 34 percent share of imports have increased from about five times that of the devel- existing ODA. The High case about 9 percent of oil importers' oping countries as a whole, and 12 already assumes this would reach 50 percent by 1990; an even higher proportion might by then be con- Table 2.8 Fuel-import cost ratios, 1970-90 ceivable. As described in Chapter (percentage of exports) 6, concessional aid is needed for 1990 investments to finance structural Country group 1970 1980 High Low changes in the longer run as well Oil importers 8.6 26.3 24.4 28.7 as to cover the short-term liquidity Oil exporters 3.8 6.1 10.2 10.9 problems resulting from a wors- All developing countries 7.5 19.3 19.9 22.2 ening current account. Thus a Note: Ratio of gross fuel imports to exports of goods and all services, current prices. 16 Table 2.9 GDP sensitivity to oil-price increases, 1980-90 In the Low case, oil importers (average annual percentage increases in real GOP) will grow more slowly than the Oil price increases' industrial countries. GNP per per- Country group o percent 3 percent 5 percent son will grow by only 2.1 percent a Oil importers 5.8 5.5 5.0 year in middle-income countries, Low-income 4.3 4.1 4.0 and only 0.7 percent a year in the Middle-income 6.1 5.7 5.2 low-income countries. The indus- Oil exporters 6.3 6.5 6.6 trial countries will still be able to All developing countries 6.0 5.7 5.5 increase income per person at 2.3 a. Growth rate of petroleum prices, 1980-90, in real terms. percent a year. Thus, even under the most favorable circumstances, the gap between the richest and times that of the low-income countries, slightly faster than the poorest will widen in this decade, oil importers. These compari- 3.1 percent a year in the industrial and this effect will be more pro- Sons have made allowance for the countries (Table 2.10, overleaf). nounced under less favorable cir- large differences in purchasing Thus the gap between those cumstances (Figure 2.3). power between countries; on an groups will narrow slightly in rela- The outlook for reducing pov- exchange-rate conversion basis, tive terms. However, because erty has worsened along with the the gaps would be much larger GNP per person is projected to prospects for the poor countries. (see box). grow at only 1.8 percent a year in Current estimates suggest that in Will that gap be reduced in the the low-income countries, the gap 1980s? In the High case, GNP per between this poorest group and person is projected to grow at 3.3 the middle-income and industrial percent a year for all developing countries will widen further. Figure 2.3 Developing countries' GNP per person 1970-90, High and Low cases (t980 de15r) International comparisons of real income Oil-importers Converting the GDPs of different coun- These figures should be treated only as tries to a common currency at prevailing rough estimates since any attempt to exchange rates is a misleading way of derive "true" purchasing power equiv- comparing real incomes. Exchange rates alents inevitably faces numerous diffi- do not necessarily reflect the purchasing culties. For example, quality and style dif- power of currencies because they exclude ferences make it hard to compare con- that (often large) portion of GDP which sumer goods; the value of services is hard does not enter into international trade. to measure, particularly if they are sup- Moreover, exchange rates now fluctuate plied free by the public sector. Neverthe- widely; changes of 20 percent or more less, the ICP results represent the best within a single year have not been uncom- methodology available for making inter- mon, even among major currencies. national comparisons of income and are The International Comparison Project much superior to standard exchange rate (ICP) is intended to correct these short- conversions. comings. It makes comparisons of price ratios for 153 expenditure categories Exchange rate and purchasing power Oil-exporters and oil importers within total GDP. The comparisons are conversions of real GNP per person, 1,600 made with respect to prices in the United 1980 States and are then weighted together to (dollars) 1,400 High/ produce a purchasing-power exchange Exchange Purchasing rate. On the basis of comparisons made in rate power Country group conversion conversion 1975 prices, purchasing-power exchange 1,200 Oil importers Low rates have been calculated for 34 coun- 790 1,700 Oil-exporters tries. Using certain short-cut approxima- Low-income 220 730 Middle-income 1,000 High_- tions, these results have been generalized 1,710 2,690 to all developing countries. The net effect Oil exporters 1,060 2,080 --- of using ICP adjustments is to increase All developing 800 - Oil-importers Low the estimates of GNP per person substan- countries 850 1,790 - tially, particularly in the low-income Industrial 600 countries (see table). countries 10,660 8,960 1970 75 80 85 90 17 Table 2.10 GNP per person, 1980-90 adjustment undertaken by the Growth rate 1980-90 developing countries will have a 1990 (average annual percentage (1980 dollars) change) pronounced effect on the num- Country gmup 1980 High Low High Low bers living in poverty in the years to come. Oil importers 790 1,060 950 3.1 1.8 Low-income 220 260 230 1.8 0.7 Middle-income 1,710 2,400 2,120 3.4 2.1 Interdependence Oil exporters 1,060 1,560 1,410 4.0 2.9 All developing Despite the widening of the gap in countries 850 1,180 1,050 3.3 2.2 incomes per person, production Industnal in the developing countries is countries 10,660 14,520 13,380 3A 2.3 growing faster than that of the developed countries (Table 2.11). (The explanation for this derives from the faster population growth 1980 about 750 million people only as rough estimates. Indeed, rates in developing countries.) As lived in absolute poverty in the the definition of poverty and its a result, the developing world is developing world, about 33 per- relation to income growth is very projected to contribute about 20 cent of its population (these esti- uncertain. Domestic policies that percent of world GDP by 1990, mates exclude China). If High case improve the productivity of the compared to only 15 percent in growth is extended to the year poorest, decrease fertility and 1970. Furthermore, it is expected 2000, the proportion could by then increase the provision of basic ne- to contribute about 26 percent of be reduced to 18 percent. But con- cessities can reduce poverty within the increase in world production tinued rapid population growth a given total income. Neverthe- between 1980 and 1990 (High would mean that the absolute less, the external environment case). By 1990 its exports will con- numbers living in poverty would and the nature of the structural stitute 25 percent of total world still total 630 million (Figure 2.4). Under the Low case, at the end of a century of unprecedented eco- Table 2.11 World production and trade, High case, 1970-90 nomic and social advance in some Gross domestic product parts of the world, 850 million Amount Percentage people may still be living in abso- (billions of 1978 dollars) lute poverty. Country group 1970 1980 1990 1970 1980 1990 Naturally, projections that look Industrial years ahead should be treated market economies 4,334 5,973 8,539 69 65 62 All developing countries 979 1,615 2,810 15 18 20 Oil importers 718 1,181 1,998 11 13 14 Low-income 148 198 297 2 2 2 Figure 2.4 Numbers in absolute Middle-income 570 983 1,701 9 11 12 poverty, 1980 and 2000 Oil exporters 261 434 812 4 5 6 Others' 988 1,608 2,395 16 17 18 Mi/boos 800 Total 6,301 9,196 13,744 100 100 100 Low-income Middle-income countries countries (35) Exports, goods and nonfactor services (billions of dollars, current prices) 600 (48) Proportion of 1970 1980 1990 1970 1980 1990 poputliOr5 (26) Industrial market economies 274 1,531 5,412 69 61 59 400 All developing countries 78 561 2,300 20 22 25 Oil importers 59 357 1,565 15 14 17 Low-income 7 27 88 2 1 1 200 1161 Middle-income 52 330 1,478 13 13 16 Oil exporters 19 204 735 5 8 8 (8) Others' 42 435 1,460 11 17 16 0 1980 2000 1980 2000 Total 394 2,527 9,172 100 100 100 a. 'Others" includes China as well as nonmarket and capital-surplus economies. 18 trade and will account for 26 per- Table 2.12 Current account balances, 1970-90 cent of the increase in world trade (billions 1978 dollars) between 1980 and 1990. High Low Since world trade is growing Country group 1970 1975 1978 1980 1985 1990 1985 1990 faster than world production, the Oil importers -18.5 -49.8 -25.5 -52.7 -49 -60 -41 -43 ratio of trade to output will Low-income -3.5 -7.0 -5.1 -8.6 -12 -15 -8 -9 approach 27 percent by 1990, com- Middle-income -15.0 -42.8 -20.4 -44.1 -37 -45 -33 -34 Oil exporters -4.7 -3.2 -17.6 4.1 -5 -14 -7 -12 pared to only 22 percent in 1980 All developing and 13 percent in 1970. As trade countries -23.2 -53.1 -43.1 -48.6 -54 -74 -48 -55 links grow closer, the developing Capital-surplus oil exportersa 6.0 39.7 18.8 85.1 [57] [35] [55] [16] countries will become increas- Industrial market ingly integrated into the world economiesa 25.9 28.4 29.9 -24.5 [12] [55] [8] [55] economy. Nonmarket industrial economies and It is, of course, difficult to mea- China 3.4 -9.0 -0.2 -0.1 -3 -4 -2 -3 sure the exact degree of depend- Statistical ence between countries or regions discrepancy -12.3 -6.0 -5.4 -11.9 -12 -12 -13 -13 on the basis of trade statistics. Note: Excludes official transfers. Total trade includes both essential a. These projections are subject to particular uncertainty. minerals and food as well as less essential consumer goods. While the global projections indicate a on the creditworthiness of devel- 1990 surplus of these countries rise in "interdependence," indi- oping countries and their access to would rise by $21 billion, on top of vidual countries (and even groups capital markets (Chapter 5). Be- the currently projected $35 billion. of countries) continue to be char- tween 1980 and 1985 the oil export- Thus the projected surpluses for acterized by "net dependence" ers are likely to move from small the OPEC countries could easily on the international economy. surplus to deficit, and then remain vary over a wide range, within the The low-income African coun- there. Conversely, the industrial assumptions of the High and Low tries, for instance, had imports countries are projected to turn a cases. Changes in these sur- equal to 25 percent of their com- small deficit in 1980 into a sizable pluses, of course, would imply a bined GDP in 1978, indicating a surplus by 1990. Their growing different pattern of surpluses and high degree of vulnerability to surplus is offset by a decline in the deficits for the other groups as conditions in the international surplus of the capital-surplus oil well. economy. Yet their combined exporters, from $85 billion in 1980 Whatever the accuracy of the exports totaled less than 1 percent to between $16 billion and $35 projections, a more interdepen- of world trade, and their share is billion (in 1978 dollars) by 1990. dent world has emerged as a result expected to decline during the Such a decline depends on the of the events of the 1970s. Despite 1980s. expected growth of imports in continuing uncertainty and insta- these countries, which is subject bility, this interdependence seems Balance-of-payments patterns to a high degree of uncertainty. likely to grow during the 1980s, Throughout the 1980s the devel- Present projections imply imports producing a different kind of oping countries are expected to of $6,500 per person in these coun- world from that of only a few years have current account deficits that tries by 1990, compared with GNP ago. The following chapters ex- are relatively large in real terms per person of only $8,100 (both fig- hibit in greater detail the nature of although they will decline as a ures in 1978 dollars). If imports interdependence in energy, trade percentage of GNP (Table 2.12). grew 1 percent a year slower than and capital flows. Such deficits, of course, depend projected in the High case, the 19 3 Growth through trade World trade grew by an average of 1980, or from 7 percent of world oil exporters by enough to cover 5.7 percent a year in the 1970s, trade to 21 percent (Table 3.1). some two-thirds of the extra cost after almost 8 percent a year in the That 14 percentage-point in- of their imported oil. Only the 1960s. Despite this slowdown of crease is considerably larger than low-income oil importers did not the growth of total trade, develop- the Federal Republic of Germany's reap significant benefits from ing-country nonfuel exports grew or the United States' share of international trade. Many of them fasterover 7 percent a year in world trade. Even excluding the reduced their current account the 1970s, as compared with 5 per- (relatively small) increase in deficits by curbing imports (and cent in the 1960s. This expansion volume, paying for the 1970s' fuel- hence growth) rather than by of trade has provided developing price increases was therefore expanding exports. Increased aid countries an avenue for growth equivalent to finding the money to helped others finance their larger and industrialization, and, for the buy all the exports of another deficits. oil importers, a source of earnings United States or Federal Republic to meet their increasing fuel costs. of Germany. Measuring trade gains This chapter analyzes trade pat- Because their exports were Against a background of rapid terns in the 1970s by country and expanding rapidly, many of the inflation, coupled with a sharp commodity groups. It considers middle-income oil importers were change in the price of one product the reasons for the poor perform- able to reduce their current ac- relative to others, neither export ance of many low-income coun- count deficits to levels finance- values nor export volumes are an tries, and highlights the well- able in the medium term, without appropriate measure of export conceived and courageously sacrificing their growth. Between performance. Export values may implemented trade policies which 1973 and 1978, the industrial coun- simply reflect the general increase underlie the trade performance tries increased their exports to the in prices, But export volumes and growth of many middle- income countries. It analyzes the contribution that the open trading Table 3.1 Composition and growth of world merchandise trade, system has made to this growth 1970-80 (values in billions of current dollars) and to the counterinflationary efforts of the industrial countries, Nonfuel Total primary and discusses some of the central Item merchandise Fuels products Manufactures Gold policy issues in international trade Value, 1980 2,133 535 400 1,170 27 negotiations. Percentage of total 100 25 19 55 1 Increase of value, 1970-80 1,818 507 312 973 26 Trade in the 1970s Percentage of total increase 100 28 17 54 1 The most striking changes in the Higher prices pattern of world trade during the as a percentage of past 10 years have resulted from increase of value 87 98 82 81 101 the increase of fuel prices. World Percentage increase trade in fuels increased from $29 of volume, billion in 1970 to $535 billion in 1970-80 74 29 64 96 4 20 understate the gains made by Table 3.2 Purchasing power of exports of all goods and nonfactor exporters whose prices have in- services, 1970-80 creased more rapidly than those of Oil importers Oil exporters Industrial other traded goods. During the Low- Middle- Deoel- Capital- market Item income income Total oping surplus Total economies 1970s, for example, the export prices of the capital-surplus oil Percentage change of terms of trade vis-a-vis exporters went up 15-fold in nomi- industrial market nal terms, almost four times as economies 16 +2 0 + 180 + 389 + 247 much as their import prices. The Total export purchasing volume of developing-country oil power (billions of 1978 exports was the same in 1980 as in dollars) Level, 1970 17 127 144 46 19 65 664 1970, but the revenue they earned Increase, 1970-80 3 118 121 105 140 245 471 could of course buy far more real Volume component 7 114 121 8 13 21 461 Relative export- goods and services. price component 4 4 0 97 127 224 To capture the impact of both Increases as percentage export volume and relative prices, of 1970 level this chapter measures export per- Total increase 18 93 84 229 737 377 71 formance in terms of export pur- Volume component 42 90 84 17 68 32 71 Relative export- chasing powerexport earnings de- price component 24 3 0 212 655 345 flated by the general price level for internationally traded goods, ex- cluding oil. (The industrial coun- tries' export price index of all goods plus nonfactor services has been Figure 3.1 Oil-importing used as a proxy for the price level developing countries' purchasing deteriorated less and their export of internationally traded goods.) power of exports, 1965-80 volume expanded more. While Where appropriate, the impact of Low-income oil importers half of the expansion of their higher oil prices on what an oil Billions of 1978 dollars exports went to pay for the in- importer can buy with its export 30 creased cost of fuel imports, their revenues will be measured by de- export purchasing power net of ducting the cost of oil imports and fuel imports increased by almost Gross two-thirds over the decade. then calculating the purchasing power of export earnings net of oil 20 - Net of fuel imports - I Over the 1970s, total export imports. This indicates whether or purchasing power (not net of fuel not an oil importer's export reve- imports) rose by 71 percent for nues are expanding rapidly 10 industrial countries; 84 percent for enough for it to pay both for oil-importing developing coun- dearer fuel imports and for increas- tries; 229 percent for oil-exporting ing amounts of other imports. developing countries, and more 0 than 700 percent for capital- Gains by country groups Middle-income oil importers surplus oil exporters (Table 3.2). Billions of 1978 dollars The oil-importing developing 300 However, developing countries countries had mixed success in began the 1970s with exports 10 world markets. The volume of times as large as those of the capi- low-income oil importers' exports tal-surplus oil exporters but less 200 did not expand enough between than one-third as large as the in- 1970 and 1980 to offset worsening dustrial countries'. Thus the abso- nonfuel terms of trade and the lute amounts by which export pur- higher fuel bill; their export pur- 100 chasing power increased over the chasing power net of fuel imports 1970s were $471 billion for in- was almost one-third lower in 1980 dustrial countries; $226 billion for than in 1970 (Figure 3.1). For the developing countries; and $140 middle-income countries, on the 0 77 80 billion for capital-surplus oil ex- 1965 70 75 76 78 other hand, the terms of trade porters (all figures in 1978 dollars). 21 ports was almost entirely the re- creased about as fast as that of Figure 3.2 Developing countries' sult of higher prices. Gains in the middle-income oil importers and increases in export purchasing power, 1970-80 purchasing power of developing- industrial countries, but their rela- country manufactured and non- tive prices fell much more (Figure Billions of 1978 ilollars 140 Oil exporters fuel primary exports resulted 3.3; Table Ti, Technical Appen- Oil importers Middle income from higher volume, partly offset dix). The low-income oil importers 120 TotaL Price by a fall in their relative price. For were therefore left with an 18 per- which 100 oil importers, the unit purchasing cent gain in the purchasing power power of their nonfuel primary of their nonfuel primary exports, 80 exports fell by 28 percent, that of compared with 32 percent for mid- their manufactured exports by 24 dle-income oil importers and 55 60 Volumea percent. But there was a much percent for industrial countries. 40 more marked difference between Since the low-income oil impor- income groups: the relative prices of ters were starting from a smaller 20 both manufactured and nonfuel base, the middle-income oil im- Low-income primary exports fell by more for porters' gain (in 1978 dollars) was 0 low-income oil importers than for 16 times larger and the industrial 20 either industrial countries or mid- countries' 60 times so. a. Part of total change resulting from change of relative pnce dle-income oil importers. The weakness of the low-in- Part of total change resulting from chaoge of volume. come countries' primary export PRIMARY EXPORTS. Prices of prices reflects both their con- nonfuel primary exports were centration in commodities for The $226 billion increase for all both erratic and generally weak which demand is expanding developing countries was divided during the 1970s. The prices of 33 slowly, and the inability of coun- as follows: nonoil commodities fluctuated by tries heavily dependent on one or Oil exporters 105 an average of 5 percent a year in two exports to vary their output- Middle-income the 1950s and 1960s, which mix as relative prices change. The oil importers 118 increased to 12 percent a year in richer, more diversified econo- Low-income the 1970s. mies are more able to adjust to oil importers 3 The low-income oil importers relative price movements. The In short, the oil exporters did well were hit hardest by low prices. industrial countries expanded because their export prices rose The volume of their exports in- their export volume most in foods sharply, and the middle-income and beverages and nonfood agri- oil importers did well because cultural productsthose catego- their export volume, particularly Figure 3.3 Industrial and oil- ries where prices were relatively importing developing countries' of manufactured goods, rose nonfuel primary exports, 1970-80 strongest. By contrast, the sharp- (Figure 3.2). But the low-income est volume increases for the low- Percentage countries experienced both slower Middle- income countries were in metals Low- growth of their export volumes 100 Industrial income income and minerals, where prices fell and deterioration of their export Vnlume most. 80 prices relative to those of other Pspoet There is another, related inflex- 60 countries: they have hardly shared purchasing power ibility holding back the low- 40 at all in the growth of world trade. income countries. They still pro- To the extent that imports depend 20 cess very little of the raw materials on export earnings, they can im- 0 they produce, in contrast to what port little more at the end of the 20 is now happening in many mid- decade than they could at the 40 dle-income countries. Tariff bar- beginningthis in the face of a 60 Relative pricey riers against processed products more than one-quarter growth of 80 are still an obstacle to increased their population. 100 processing for exports, but the Not e: Increase in purchasing power, 1970-80, as percentage middle-income exporters also face Gains by commodity group of 1970 level a Parr of total change resulting from change of volume. these barriers (see box). A general The increased purchasing power b. Part of total change resulting from change of relative lack of industrial skills and capac- of developing-country fuel ex- ity is a more fundamental reason 22 Tariff escalation and the growth of processing While the rapid growth of world trade in these shortcomings are much less They would grow faster still if indus- manufactures bears witness to the open- serious. trial-country tariffs were reduced. Re- ness of industrial country markets for Generally, transport costs are less, ad moving the tariffs on processed varieties many products, tariffs remain high in valorem, at higher stages of processing of eight agricultural products in which some sectorsparticularly those of inter- (the value of the product increases more developing countries have a significant est to developing-country exporters. per ton than do shipping costs); but there share of world exports would increase the Even after the Tokyo Round cuts have are many exceptions to this rule. Other value added in developing-country pro- been made, tariff rates in the United complications abound: refined coconut cessing by an estimated 20 percent or States will still be 17 percent on textiles oil spoils unless carefully handled, while more. It would boost developing-country and clothing; in the EEC, 11 percent on crude coconut oil does not; the world export revenues by more than the Gen- consumer electronics equipment; in Nor- way, 15 percent on leather goods; in Can- ada, 10 percent on hand tools and other Industrial-country tariff escalation and distribution of metal products. imports from developing countries Even where tariffs are generally low, Average they can still be a considerable barrier to ad valorem the expansion of processed exports by tariff (pre-Tokyo Round) producers of primary products. While Distribution Imports from industrial-country tariffs add only 3 per- Effective of imports developing Nominal (on value from countries cent to the cost of imported raw materials, Level of (on total added in developin' as a percentage they rise to more than 20 percent as the processing' values) processing) countries' of total imports' degree of processing increases (see table). Stage 1 3 3 54 41 These higher rates are, of course, in- Stage 2 8 23 29 26 tended to encourage firms in industrial Stage 3 9 20 9 12 countries to import raw materials and Stage 4 9 15 8 23 process them there. As the third column Total 100 28 of the table shows, in 1974 developing- Based on processing "chains" for 21 agricultural and mineral products. For example, country commodity exports were heavily the chain for cotton and products is (1) raw cotton, (2) cotton yarn, (3) cotton fabrics, (4) concentrated in the lower stages of pro- clothing. cessing. Based on 1974 imports. As an intermediate activity between Source: Yeats. primary production and manufacturing, processing is often viewed as a way of promoting industrialization in the devel- cocoa market is highly concentrated and, eralized System of Preferences has done. oping countries. However, processing therefore, more difficult to enter than That may not have a large impact on should be judged by the same criteria as others. the 90 or more poor countries that depend those applied to any other industrial proj- The difficulties are not insuperable. on nonfuel primary materials for two- ect, and the same questions posed about Coconut-oil refining has expanded thirds or more of their export earnings. market prospects and domestic resource considerably in the Philippines, although During the 1970s, the growth of process- and foreign exchange costs. In some this expansion has been largely for local ing by developing countries has been cases, the technology of processing is consumption in the growing processed- concentrated in the middle-income coun- very capital-, scale-, or energy-intensive food industry. The developing countries' tries. It seems to be determined by the (for example, aluminum). It may require share of world aluminum production rose same factors that have promoted manu- intermediate inputs that must be im- from less than 1 percent in 1955 to almost 8 factured exportsskills, entrepreneur- ported, thereby reducing the net foreign percent in 1978. Generally, the processed- ship and an efficient infrastructure. exchange gain from exporting processed material exports of developing countries These are often lacking in the poorest rather than primary commodities. In have been growing faster than exports of countries and are not made good purely other cases, particularly in the early stage primary materials, but not nearly as fast by lower tariffs. of processing of agricultural products, as manufactured exports. why few low-income countries ariddespite significantly slower again had the worst performance. have yet made a processing break- growth in the industrial coun- Their manufactured export vol- through. triesthe developing countries ume increased by 90 percent dur- expanded their manufactured ing the 1970s; but in terms of MANUFACTURED EXPORTS. Manu- exports more rapidly in the 1970s export purchasing power, more factured exports grew faster than than in the 1960s. than two-thirds of this volume did primary exports in the 1970s, The low-income oil importers increase was offset by declining 23 relative prices. Middle-income oil Market penetration tional policies are reflected in the importers raised the volume of During the 1960s, manufacturing penetration ratios of six of the their manufactured exports by production rose by 7.5 percent a European Economic Community almost 300 percent and lost less year in the developing countries (EEC) countries; despite their than one-third of this through and 6.5 percent a year in the common external tariff and in- relative price declines (Figure 3.4). creasing harmonization of other industrial countries while each Breaking down export purchasing increased their manufactured trade policies, their penetration power gains into relative price and exports by just over 10 percent ratios range from 7.4 percent for volume components reveals a a year. In the 1970s, however, the Netherlands to 2.6 percent for the difference between the two France. The lowest ratio is in groups was striking. Japan-1.3 percent in 1970, up to The developing countries re- only 1.5 percent in 1978. Figure 3.4 Industrial and oil- importing developing countries' covered quickly from the 1974-75 Industry by industry, however, manufactured exports, 1970-80 recession so that in 1970-78 their import penetration patterns vary Percentage manufactured output grew almost little from one industrial country Middle- Low- as rapidly, and manufactured to another. Imports tend every- Industrial 300 income income exports to industrial countries just where to be highest in labor-inten- as rapidly, as they did in the 1960s. sive products like textiles, cloth- 250 But the industrial countries in- ing, footwear, toys and sporting 200 creased their manufactured out- equipment. 150 put barely half as fast as they did 100 in the 1960s. South-South trade 50 As a result, the developing As the developing countries and 0 countries have increased their the capital-surplus oil exporters -50 -100 Table 3.3 Developing-country shares in the apparent consumption Relative Prier5 -150 of manufactured goods in industrial countries, 1970-78 Note: Increase in purchasing power. 1970-80, as Share of apparent consumption prrrrntogenf 1970 level. Part of total change resulting tram change of volume. Percentage- Port t total change resulting from change of relative 1970 1978 point Country or trading group (percentage) (percentage) increase Australia 2.1 4.8 2.7 Canada 1.2 1.9 0.7 EECr selected members 2.7 4.1 1.4 strong positive relation between Belgium 5.6 4.2 -1.4 France 2.1 2.6 0.5 volume and price performance Germany 2.3 4.1 1.8 (Table T2, Technical Appendix). Italy 2.1 3.9 1.8 This highlights the importance of Netherlands 4.9 7.4 2.5 United Kingdom 3.3 4.8 1.5 flexibility and entrepreneurship- Japan 1.3 1.5 0.2 the capacity to read markets and Sweden 2.8 3.1 0.3 adjust the product-mix to take ad- United States 1.2 2.9 1.7 11 industrial countries 1.7 2.9 1.2 vantage of favorable price shifts. The success that developing countries have had in expanding manufactured exports is more con- share of industrial-country mar- increased their share of world centrated than Figure 3.4 would kets. Although this increase has exports, they became more impor- suggest. In 1978 only 10 countries, been marked, their market share tant markets for world imports- with 45 percent of the developing is still tiny-only 2.9 percent in the middle-income oil importers world's population, supplied 1978, up from 1.7 percent in 1970 particularly for primary products, more than 75 percent of its manu- (Table 3.3). History obviously in- and the oil exporters for manufac- factured exports; and three coun- fluences the degree of penetra- tures and for primary products. tries, with less than 3 percent of tion-witness the high ratios for As a result, the shares of develop- the population, supplied more the United Kingdom and the ing-country nonfuel exports to than 40 percent of the total. Netherlands. Differences in na- other developing countries and 24 to the capital-surplus countries cess that some of them have placing small-scale enterprises on both increased. As to source of enjoyed is as much the result of an equal footing with large firms imports, the oil importers traded their own efforts and of their own so that they could obtain credit, in increasing proportion with each well-conceived policies as of the technical assistance and market- other, and the oil exporters in openness of the trading system. ing support. increasing proportion with the Thus, policies in the successful The outward-looking middle-income countries have been generally industrial countries. The decline of the oil importers' countries supportive of industrialization share of the oil exporters' market The nature of the response to the and commerce but have avoided reflects two factors. First, man- international environment of the directing that support at any par- ufactured imports by the oil ex- countries that have enjoyed a mea- ticular sector or method. Deci- porters (particularly the capital- sure of success was the focus of the sions about what activities and surplus oil exporters) are con- 1979 World Development Report.As a what processes could be efficiently centrated on the more advanced group, the successful countries and profitably built up are left to capital and consumer goods, have been those which have re- individual firms, which succeed which are produced in the indus- sisted or overcome the temptation or fail as their decisions prove to trial countries. Second, the oil to adopt inward-looking trade be correct or incorrect. exporters' demand for nonfuel policies and to delay transition to The most noted among the suc- primary imports, particularly greater export orientation. Al- cessful countries have been the food, increased rapidly. Through though some of the successful semi-industrial countries such as the 1970s, the industrial countries' countries have exploited import Singapore, South Korea and export supply of these products substitution at earlier stages of Spain. Although a few of them expanded more than did the de- industrialization (particularly the were nonindustrial, low-income veloping countries'. The industrial larger ones such as Brazil), they countries in the 1950s, they are countries therefore took the larger avoided the burdens to exports now characterized by relatively share of this new market for pri- that extending import substitution high shares of manufacturing in mary products. to intermediate goods would have production and exports and are The increased intra-trade of the entailed and began at an early generally among the wealthier oil importers was due entirely stage to move away from this middle-income countries. Many to the middle-income countries. orientation. of them have achieved impressive Their intra-trade in manufactures This shift away from an import- rates of economic growth and expanded, and their growing substituting policy-orientation to- structural transformation (Figure demand for raw materials was met ward what is often called an out- 3.5 overleaf). by expanding supplies from the ward orientation, has been less a In the semi-industrial countries industrial countries and from reduction of governmental or p0!- of East Asia, successful develop- other middle-income countries. icy-provided incentives for the ment has had two hallmarks: a This new import market, like that expansion of industry or primary supportive approach to increases of the oil exporters, has been cap- production than an elimination of in agricultural productivity and hired only marginally by the low- biases in these policies. Earlier growth, along with readiness at an income countries. policies often favored an indus- early stage to replace inward-look- trial structure more or less along ing import-substitution policies the lines of those already in place with trade policies favoring the Developing-country trade policy in the industrial countries, and growth of exports in general and and growth not consistent with the resource of manufactured exports in par- The boom of world output and patterns existing in developing ticular. A shift to a similar policy- trade, which began in the 1950s countries. Policy reform meant not orientation by several middle- and built its momentum through only identification and scrapping income Latin American countries the 1960s was, in large measure, of disincentives to produce for has caused their trade perform- the result of deliberate and suc- export, or disincentives to use ance to improve markedly. These cessful international efforts to imported inputs when they were countries have now reached the reduce restrictions on interna- the less expensive, but also ending stage at which they can begin to tional trade. The diverse trade policies that favored capital-inten- shift into more demanding, skill- record of developing countries sive over labor-intensive sectors and technology-intensive areas of suggests, however, that the suc- and methods of production and production while continuing to 25 population or output is three- imports. A decade of import Figure 3.5 Developing countries' fourths of low-income oil-import- substitution had reduced its im- exports to industrial countries, ing Asia) and several other low- 1968-78 ports to absolute necessities. Low- income Asian countries, the man- income Asia (particularly India) Volo,,re charigi' (1970 100) 250 ufacturing sector produced in the was forced to move marginally early 1970s as large a fraction of toward export expansion (see box the countries' gross product as it on India, page 80). In the follow- 200 did in South Korea and Singapore. ing years, their export-GDP ratio Manufactures are as large a share rose slightly, and their export Manufactures / of low-income Asia's exports as of volumes expanded strongly in 150 the middle-income oil importers. percentage terms. But because of Low-income African countries, on the low initial levels of exports and Raw materiats the other hand, have a very small the relative decline of their export manufacturing sector, and their prices, these gains came to much 100 Food export earnings come almost en- less, in dollar terms, than those tirely from commodities (Table captured by the middle-income 3.4). countries. 01 I The major difference between I 1968 70 72 74 76 78 Note Country and commodity groups correspond to UN the Asian low-income countries classification. Devetoping c000trirs include capital-surplus ind the middle-income countries Trade prospects oil exporters; industrial c000tnes ioctude Sooth Africa and most of Southern Europe. Manufactures inclode non- ferroos metals; raw materials exclude food ond turf. is not the structure but the amount The record of the 1960s and the of their trade. The export-GDP 1970s indicates that the interna- ratio is three times larger for the tional environment does not dis- middle-income countries. India criminate in favor of the weaker improve earning opportunities for is, in terms of structure, a semi- countries or aapick them up" and the rural population. industrial country, but one whose start them on the path to develop- Another group of successful inward-oriented policies have ment. On the other hand, the countries has seen an outward ori- hitherto isolated it from the international environment has not entation lead first to a deepening markets that have allowed other been hostile. The volume of devel- and broadening of their agri- Asian countries to move ahead. oping-country exports, particu- cultural exports, the Ivory Coast When faced in 1973-74 with larly of manufactured goods, has and Malaysia, for example. From higher fuel-import prices, low- increased dramatically, and this this base they are now moving income Asia did not have the flex- increase of exports has not yet into processing and into industrial ibility to adjust by reducing other caused major resistance to arise. sectors. As explained in Chapter 6 of Table 3.4 Structure of merchandise trade, low- and middle-income this Report, countries that have oil importers, 1970-80 continued in place or adopted out- (percentage) ward-oriented policies have been Composition of Composition of merchandise exports merchandise itn ports the most successful in adjusting to Year, country Export- external shocks without excessive group and GDP Manu- Nonfuel Mattu- region ratio factures primary factures Food Fuel recourse to foreign borrowing or 1970 severe cutbacks of rates of eco- Low-income nomic growth. The flexibility that oil importers an outward orientation provides Africa 23 11 86 77 11 9 Asia 7 54 43 64 21 5 has outweighed the vulnerability that it risks. Middle-income oil importers 22 33 58 69 12 10 1980 The low-income oil importers Low-income oil importers The low-income oil-importing de- Africa 16 9 80 51 16 31 veloping countries include coun- Asia 9 47 50 38 14 39 tries with very different economic Middle-income oil importers 24 46 36 53 28 structures. In India (which, by 11 26 Because of the continuing impor- The situation in low-income brought low prices for metals and tance of international trade (par- Africa is much different. Many minerals, in which the exports of ticularly trade with the industrial countries, such as Chad and low-income African countries are countries) as an avenue of devel- Upper Volta, have an extremely concentrated (see box below, and opment, the continued openness limited base of physical and the one on Zambia, page 78). of the trading system (to be dis- human resources (see box on Slow growth of export volume cussed below) is critical. Upper Volta, page 84). In a num- and declining relative prices have As long as the trading system ber of countries, that base is actu- reduced export purchasing power remains open, the now successful ally diminishing, for example, by roughly equal amounts. If rela- middle-income countries should from overexploitation and erosion tive export prices had not de- continue to progress. Their expan- of farmland along with emigration clined over the 1970s, low-income sion of manufactured exports, of the younger and better trained Africa's 1980 export volume would particularly their continued ex- work force. have sold for $2 billion more than pansion through the 1970s, has Some countries have attempted it did. Similarly, holding its 1970 been based more on their own to provide a level of public services share of the volume of world ex- competitiveness and entrepre- that their resources could not sus- ports would have meant $2 billion neurship than on the pull of ex- tain. These policies became, in more-45 percent moreexport panding industrial-country mar- effect, transfers from the rural purchasing power in 1980 (1978 kets. Their capacity to diversify poor to the urban less poor, and prices). has been documented, and, as strong disincentives for agricul- Malawi and the Ivory Coast are this chapter shows, has been more tural production (see Chapter 6). examples of African countries that than sufficient to prevent terms- Declining production, along with have adopted outward-oriented of-trade declines from taking away shifts from cash to subsistence policies and have done well, but it the gains in export receipts that crops, have brought about a sig- is clear that trade policy alone is their increased export volume has nificant drop of low-income not sufficient to accelerate the provided. Finally, their economies Africa's export-GDP ratio and of development of many African are becoming large enough to sup- its share of world exports. And, countries. In them, attention over port efficient scales of operation although many commodity prices the next decade must focus on and further overall growth, par- increased during the mid-1970s overcoming their poverty of ticularly if their trade policies "boom," the late 1970s' recession resources, particularly their lack of allow specialization and trade in the industrial countries has human capital. Internally, their among them to evolve. The near-term trade prospects of the low-income Asian countries are more dependent on the Mineral investment needs growth of world demand. Until Recent low prices for metals and other ment in developing countries will have to their exports deepen into pro- nonfuel minerals reflect the fact that be externally financed. cessed materials and more so- world economic growth in the 1970s was phisticated manufactures, their slower than envisaged when present mining capacity was installed. But vari- World capital requirements, export prices and earnings will ous projections suggest that by the 1977-2000, for needed continue to be closely tied to move- mid-.1980s, mineral demand may be 25 to additional capacity, selected ments of international demand. 40 percent above its level of the mid- minerals (billions of 1977 dollars) Over the longer term, their 1970s; by the end of the century, it could trade prospects are primarily a be 90 to 190 percent higher than at pres- Dcs'elopi;b' ent, depending on the mineral. Mineral VVorJd countries question of their own policies. Developing the capacity to meet the Bauxite 6.9 5.2 They have the human and natural extra demand will require considerable Alumina 24.4 6.1 resources which have been, in investment. The table shows one estimate Aluminum 76.6 17.6 countries with outward-oriented of what will be needed in certain key min- Subtotal 107,9 28.9 policies, the basis for sustained erals. Including infrastructure and capac- Copper 58.0 29.0 ity expansion in other minerals the world Nickel 12.5 5.0 growth of exports. As noted total may be $12.5 billion a year (1977 dol- Iron ore 98.2 31.4 above, their export volume in- lars), and in developing countries $5.5 bil- Tin 1.7 1.4 creased sharply during the 1970s lion a year, for the rest of the century. An Total 278.3 95.7 when they then moved toward estimated three-quarters of the invest- Source: Mikesell. this orientation. 27 policies must carefully avoid disincentives for investment and Multi-Fibre Arrangement entrepreneurship. And while In the 1950s protection for western indus- 3 of the MFA provides for unilateral action good trade policy may not, by trial countries' textile industries was to limit textile imports; Article 4 sanctions aimed primarily at Japan and took the bilateral agreements that limit trade on itself, lead to development, ill- form of voluntary restraint Ofl exports. "mutually acceptable terms." The context conceivesl trade policy can undo The first steps away from this informal in which the MFA was negotiated and the the effects of other factors. framework were taken in 1961 and 1962 way it has operated also suggest a restric- As explained in last year's World with the introduction of the Short-Term tive rather than expansionary goal. and Long-Term Arrangements Regarding Since the negotiation of the MFA, the Development Report, investment in Trade in Cotton Textiles (STA and LTA). EEC, the members of the European Free human resources is very produc- These arrangements established a pre- Trade Association, the United States and five, but many low-income Afri- cedent for special treatment for the textile Canada have all developed elaborate pro- can countries are too close to the industry, outside the usual rules of the tective systems for textiles. These are subsistence level of income to GATT. In 1974 the LTA was replaced by the rooted in bilateral agreements negotiated Multi-Fibre Arrangement (MFA), which under Article 4 and enforced, when nec- finance such capital formation essary, at the national level by unilateral covers a broader range of textile products from their own savings. And they than had the LTA. action justified under Article 3. have almost no access to private The MFA expresses three goals: Two bodies have been established to capital markets. Finally, high the expansion of textile trade, and the oversee the operation of the MFA: the energy prices are a factor which reduction of barriers to such trade; GATT Textiles Committee and the Textiles the orderly and equitable develop- Surveillance Body (TSB). The former is an today's middle-income countries ment of this trade and avoidance of ad hoc committee, whose primary re- did not have to face in the early disruptive effects, in both importing and sponsibility is to produce a yearly report stages of their development. exporting countries; and on the operation of the MFA. The TSB is a International assistance will be the economic and social develop- more permanent body, whose official necessary to allow the poorest ment of developing countries, including a purpose is to ensure the "efficient opera- substantial increase in their export earn- tion" of the Arrangement. When parties countries to overcome these ings from textile products and a greater to action under Article 2 or 3 fail to agree, obstacles. share for them in world trade in these the TSB has to make "recommendations products. to the parties concerned:' Its annual Industrial-country policy The operative clauses however relate report shows that its standard recommen- only to the second goalparticularly to dation is for the parties to engage in In one important sense, the 1970s the control of disruptive imports. Article further consultation with one another. continued the trend toward freer trade that had begun after the sec- ments, reference or trigger price tuted an unfair subsidy to exports ond world war. Though negoti- arrangements, safeguards, coun- of petroleum-based synthetic ated in the 1960s, the Kennedy tervailing and antidumping duties: fibers. Round tariff reductionswhich these administrative mechanisms Changes in trade policies were cut industrial-country tariffs by covered an increasing proportion not the only governmental mea- one-third on two-thirds of their of world trade during the 1970s. In sures that had a protectionist dutiable importswere not fully the second half of the decade, impact. Governments became implemented until 1972. When industrial countries imposed re- more actively involved in regional the Tokyo Round Tariff cutsne- strictions (sometimes temporary) and industrial policy; their indus- gotiated in the 1970s, to be imple- on imports of cutlery, bicycles, trial subsidies had the same effect mented over 1980-87are in televisions and other electrical as tariff protection and were often place, industrial-country tariffs components; they also revised more significant. In 1976, they will average only 5 to 6 percent ad and tightened textile quotas. totaled approximately 6 percent of valorem. They will however still Apart from the clothing and tex- GDP in Norway, 4 percent in be much higher on labor-intensive tile restrictions, curbs were gener- Belgium and 3 percent in France, products, which are of prime sig- ally aimed at other industrial the Netherlands and the United nificance for developing countries. countries. There were serious Kingdom. By comparison, the However, the 1970s did see one trade disputes between the amount that tariff protection new and disturbing development United States, the EEC and Japan added to producer revenues came in trade relationsa plethora of over steel and automobile trade. to less than 3 percent of GDP in specific restrictions, introduced Even in textiles, the United States each country. in numerous different ways. The and the EEC disagreed over the Many of these subsidies were Multi-Fibre Arrangement (see effects of the US domestic energy overtly protectionist. But in some box), voluntary restraint agree- policy and whether this consti- cases, the economic objective was 28 not simply to protect but to activities, has often been swal- might be imposed. restructure the economy. Sub- lowed up in this general vague- On the other hand, the 1970s sidies, it has been traditionally ness and turned into strongly pro- saw the last stages of the Kennedy argued, are a better way of achiev- tectionist adjustment resistance Round tariff cuts, the negotiation ing that objective than indirect (see, for example, the box on the of the Tokyo Round reductions measures like tariffs. They can be Trigger Price Mechanism). and the introduction of the GAIT aimed directly at the source of a nontariff-barrier codes of conduct. problem. When subject to budget In addition, the industrial coun- appropriations, they can be con- Openness of the trading system tries extended measures whose trolled carefully. It is hard to gauge how the degree express purpose or immediate Political realities, however, have of "trade openness" has changed effect was to expand developing- meant that approval of a subsidy over the 1970s. On the one hand, country exports. The most noted required a compromise of objec- the number of trade disputes of these was the Generalized tives and some disguising of receiving public attention and the System of Tariff Preferences amounts. As a result, the purpose proportion of trade coming under (GSP), which reduced trade bar- of many subsidies has never been some sort of government scrutiny riers on many developing country clear and some have been inten- or guidance certainly increased. exports (Table 3.5, overleaf). tionally ambiguous. Many take The EEC, for example, introduced There was also a considerable the form of tax exemptions or a formal procedure for placing expansion of industrial-country discretionary relief and so are not imports of particular products imports from developing coun- subject to budgetary or other from particular sources under tries under value-added or off- review. Adjustment assistance, "surveillance." Surveillance in- shore-assembly tariff provisions. which was originally intended to volves no restrictive measures but These allow favorable tariff treat- retrain workers and help firms is a clear warning that, if imports ment for products containing enter new or more competitive continue to grow, restrictions parts or components that were The Trigger Price Mechanism for steel imports Through the 1960s and 1970s, the profit nism was a delicately balanced combina- voluntarily observed, and ruinous (from rate in the US steel industry was low, and tion of legal threat and oligopoly pricing. the seller's point of view) price competi- by 1977, the import share of the US mar- Legal threat was the most emphasized tion minimized. Consistent with this ket was up (from 2 percent in the late element. Any foreign firm that priced model, the TPM has actually triggered 1950s) to 18 percent. This brought on below the trigger prices might be subject only three antidumping investigations. increasing pressure for protection. to an immediate antidumping investiga- The social justification for the TPM was In late 1977, after consultations with the tion and, if found to be dumping, re- that it would help generate the $7 billion a industry and with the congressional dele- quired to pay antidumping duties. In year (at 1978 prices) needed to modernize gations from steel-producing areas, the reality there was little likelihood that anti- the domestic industry, but it is not White House announced a program to dumping charges would increase. Estab- apparent that it has been an effective help modernize the US steel industry. lishment of TPM did not change the anti- industrial policy. The quarterly adjust- This program would include loan guaran- dumping law, and it did not provide addi- ments of the trigger prices compound to a tees, and some relaxing of environmental tional resources for its enforcement. The 14 percent per year increase of import regulations, but the centerpiece was to be law itself defines dumping very precisely prices. The estimated amount by which a "Trigger Price Mechanism" (TPM) to and allows very little latitude for political the TPM has allowed prices of domestic prevent "unfair" price competition from discretion. steel to increase is smaller, and this imports. The TPM did, however, fit well with the increase has been matched by increases of In concept, this mechanism was to be tendency for industries with high fixed domestic firms' costs. The Trigger Price quite simple. Costs of production in the costs and relatively few competitors to Mechanism has facilitated the pass- world's lowest cost producer, Japan, shy away from price competition, and through of domestic firms' cost increases, would be determined and publicly an- once a price leader has been established, but it has not helped them gain control of nounced. These figures would be the to follow its lead voluntarily. Price leader- their costs, and the investment funds "Trigger Prices." Then, if the price ship is an accepted practice under US needed for modernization are not being charged for an import shipment were antitrust lawand was established as generated. This means that the need for below the trigger price, the US Govern- such by Supreme Court decision in the the government's present role in the ment would consider launching immedi- United States Steel Corporation case in industry's pricing mechanism will not ately an accelerated (or "fast-track") 1920. This "price leadership" model of disappear, and as the Trigger Price antidumping investigation against the industry pricing suggests that as long as Mechanism has been functioning, that foreign supplier. the US government announces prices that role adds to the rate of price increase in In practice, the Trigger Price Mecha- seem "fair" to all sellers, they will be the industry. 29 made in the importing country. In increase, and economies will not domestic demand. This left pro- the United States, imports from adjust smoothly to changed inter- ducers with little incentive to com- developing countries under these national circumstances. pete for foreign markets. provisions continue to be as large There are two dimensions to But the growth of world trade in as GSP imports and are no less this adjustment. One takes the industrial products, recent indus- favorably treated. These schemes familiar form of transferring re- trial country growth rates lower are also important in the Nether- sources from less productive to than had been expected when lands and the Federal Republic more productive uses, in response present capacity was installed and of Germany, and Japan imple- to changing patterns of demand, rising energy prices in the United mented one during the 1970s. technology and comparative ad- States have intensified competi- tion among industrial countries. The relevant definition of the Table 3.5 Import coverage of the Generalized System of Tariff market for many industrial goods Preferences, 1976 (millions of dollars) is now international, and the market power of producers in any Nonfuel merchandise imports from developing countries one country is much less than it Under GSP Total was even a decade ago. Country or trading group value Value Percentage of total The changes that adjustment to Austria 647 126 19 greater competition within indus- Australia 1,268 179 14 Canada 2,031 303 15 tries demands do not necessarily EEC 15,155 4,446 29 include a net transfer of resources Finland 415 21 5 Japan 12,314 1,789 14 Norway 556 22 4 Figure 3.6 Industrial countries' Sweden 1,247 145 12 demand for manufactures, Switzerland 1,042 257 25 United States 24,499 3,154 13 1970-78 Total 59,174 10,442 18 Growth of purchases of: Constant prices (1970 150) 250 - Developing-country exports to vantage. Industries facing direct industrial countries expanded competition from developing fastest in those labor-intensive countries (for example, in textiles 200 Imports from developing products most subject to trade and footwear) fall mainly into this countries restrictions. This reflects the large category (Figure 3.6). Imports from cost differences between indus- Another, more recent, form of industrial countries,.. 150 trial and developing countries, adjustment is that which has to which trade barriers were not able occur within industries. Examples Oomestically to offset. It is also a tribute to the include motor vehicles and steel, produced goods 1100 ingenuity of developing-country which have long been highly con- 1970 1978 exporters who found ways to meet centrated and protected from Market shares, 1978 these administrative requirements foreign competition by tariffs and (percentages) and to vary products and markets location. Differences in gasoline Imports from so as to minimize their impact. prices and in highway systems led industrial countries to significant differentiation be- Prospects tween American autos and autos The industrial countries still sup- produced for European and Japa- ply three-fourths of all nonfuel nese markets, insulating Ameri- exports and buy three-fifths of can producers from international nonfuel imports; their policies will competition over the major part of mainly determine whether the their product line. As tariffs were international trading system re- reduced throughout the 1950s and mains open. Much depends on 1960s, the industrial countries their raising their output- and pro- were growing rapidly, and domes- ductivity-growth rates. Without tic capacity in these industries was that, protectionist pressures will always strained to keep up with 30 out of such industries. Particu- tural adjustments. Yet there are and ultimately higher paying larly, it does not imply the replace- still groups with a vested interest alternatives, but to persuade them ment of industrial-country pro- in the old policy regime. In the to accept the lower rates of re- duction by imports from develop- developing country, their inter- turn required by the loss of their ing countries. Developing coun- ests were protected by trade bar- market power. tries' production of steel and tiers; in the industrial country, by The key to maintaining an open motor vehicles is expected to market structure. An uncompeti- trading system is for each indus- increase strongly over the next tive industrial country then faces a trial country to come to grips decadebut so is their consump- choice between import substitu- domestically with the opportunity tion. Of course, output will not be tion, which would protect tradi- and the challenge which adjusting matched by consumption in every tional patterns of output and in- to a changing international envi- single country, so international come distribution at the cost of ronment involves. The industrial trade will be affected. Both exports further growth; or outward- countries will certainly benefit and imports of developing coun- oriented policies, which have from expanding their trade with tries will increase, adding to the proved successful for many devel- developing countries. From 1970 competitiveness of the world oping countries. The industrial to 1978, developing-country ex- market. countries' choice, often presented ports of manufactured goods to The adjustments required by as "protect or adjust," is in reality industrial countries increased by this erosion of the market power "protect or grow." almost $12 billion (at 1970 prices); of national firms are less in the Adjustment policies aimed at but industrial countries increased structure of production between assisting people to transfer from their manufactured exports to de- industries, than in the structure of one industry to another will not veloping countries by almost distribution. Profits and (par- on their own be sufficient. With- three times as much (Table 3.6). ticularly) wages in concentrated out growth, alternative employ- Even excluding the growth of industries have traditionally been ment will not be created. Adjust- exports to the oil exporters, the higher than in other industries. ment policies, no matter how well- industrial countries' trade surplus Governments have claimed their designed, will have the effect only in manufactured goods has been share of these higher returns by of maintaining incomes. Even growing since 1973 at more than 5 taxation and by imposing safety or with growth, adjustment in in- percent a year in real terms. environmental regulations that dustries whose competitive struc- Neither are the benefits from less oligopolistic industries could ture has changed will be resisted. trade simply a question of trade not have borne. The need there is not to shift surpluses. Trade with the devel- With the market power of such resources to higher productivity, oping countries has helped raise industries diminished by interna- tional competition, that tradition can no longer be supported. Table 3.6 Increments in the volume of nonfuel trade between Nationalization or government- developing and developed countries, 1960-80 (billions of 1970 dollars) sponsored cartels have failed to restore or protect market power Product category because it was the increase of inter- All nonfuel national competition that created Foods, Raw materials Nonfuel All merchandise the strains. In some instances, gov- Time period and etc. excl. fuels materials manufactures (0-8, direction (0+ 1) (2+4) (0+1+2+4) (5-8) less 3) ernment intervention (by financ- 1960-70 ing sales below costs) has actually Developed to intensified the degree of interna- developingL 1.45 1.03 2.48 15.22 17.70 tional competition. Developing to This suggests that the position developedb 2.56 1.90 4.46 5.78 10.24 of industrial countries whose eco- 1970-78 nomic performance is lagging cor- Developed to responds to that of a developing developingb 3.86 1.88 5.74 31.83 37.57 Developing to country which has reached the developedb 0.98 0.15 1.13 11.48 12.61 limits of import substitution. Fur- SITC definition. ther growth (particularly of pro- Country groups correspond to UN classification. Developing countries include the ductivity) requires major struc- capital-surplus oil exporters and exclude South Africa and most of Southern Europe. 31 the efficiency of manufacturing in Trade measures to support low-income But in many cases, good market- the industrial countries. It has countries ing has turned a developing-coun- helped them in their counter-infla- A key element is the restoration of try identity into an advantage. tionary efforts, bringing considera- economic growth in the industrial Colombian coffee, Jamaican rum, ble benefits to consumers. And it countries. The export receipts of Brazilian furniture and Kenyan has provided the spur to moving the low-income countriescon- fashions are examples. resources out of low-productivity centrated on unprocessed mate- Such efforts by the industrial industries and firms into sectors rials and unsophisticated man- countries and the oil exporters that provide higher wages and, ufacturesare more sensitive to will, however, have no effect if the ultimately, greater job security. the state of the world economy low-income countries are isolated In some industries, notably tex- than those of the middle-income from world markets by their own tiles and clothing, telecommunica- countries. trade policies or if their domestic tions equipment, and household policies make it financially diffi- appliances, industrial-country The reluctance of many indus- trial countries to make the adjust- cult for their firms to become relia- imports from oil-importing devel- ble suppliers on terms normally ments that changes in the interna- oping countries have been increas- encountered in international com- ing more rapidly than their exports tional environment demand is merce. to them. But even in these sectors, slowing down their growth and simultaneously limiting the The International Monetary jobs lost as a result of increased Fund's Compensatory Financing imports have been small compared export prospects of the develop- Facility was expanded twice dur- with the effects of demand ing countries. From 1978 to 1980, ing the 1970s and the European changes, technological develop- the low-income oil importers not Community's Stabex scheme im- ments and productivity growth. only saw the increase of oil prices added to their current account plemented. The United Nations And the number of jobs lost has Conference on Trade and De- been more than offset by employ- deficit but experienced an addi- velopment (UNCTAD) Common ment opportunities created by tional decline from the recession Fund for commodities has been boosting exports to developing in the industrial countries. negotiated but not yet ratified by countries in other, usually higher On their part, the low-income enough countries to come to life. paying, industries. countries might examine the Even so, the exports of primary emerging patterns of demand for producers were at least as unstable food and other primary products, in the 1970s as in previous periods. International cooperation particularly in the oil exporters Their terms of trade and export In the nearer term, world atten- and middle-income countries. receipts remain closely tied to the tion must focus on the immediate Where possible, they should industrial countries' business need to expand the export earn- diversify their export production cycle. The diversification of the ings of low-income oil importers. to capitalize on these growing middle-income countries' exports Even in the High case, their export markets. and their expansion into process- purchasing powerafter taking To help overcome the scarcity of ing have been the more significant out their payments for fuel im- entrepreneurship and marketing contributors to the expansion and portswill still be below its 1970 skills in the low-income countries, to the stabilization of their export level (Table 3.7). the capital-surplus oil exporters receipts. might actively seek to expand their imports from these coun- Longer term considerations tries. They could seek out sup- Over the past 35 years, countries Table 3.7 Export purchasing pliers and help to establish mar- have learned the advantages of power net of fuel imports for keting facilities for products from cooperative trade arrangements low-income oil importers, 1970 the low-income countries. and have organized and overseen and 1980 The same effort could be made these in numerous different ways. (billions of 1978 dollars) in the industrial countries. Their Industrial country tariffs on most Area and 1990 country group 1970 1980 High case markets for primary products are manufactured goods have been Africa 7.4 3.7 4.3 growing less rapidly, and con- negotiated down to insignificant Asia 8.8 7.3 8.0 sumer loyalty to particular prod- levels. Countries have committed All low-income ucts and brandnames are there- themselves against generalized oil importers 16.2 11.0 12.3 fore more difficult to overcome. protection through the OECD 32 "trade pledge," renewed annually Trade in services lacks an inte- since 1974, and through agree- grated system of international Protection's price ments reached by heads of state at principles or conventions. Service Trade protection is an inefficient way to summit meetings of the larger trade (defined to include, for ex- transfer income. That is a dull way to ample, transport, tourism, bank- express a simple truthif someone gains industrial countries. a dollar from protection, someone else in The recent adoption of a frame- ing and financial services and con- the same country loses a lot more. For every work of codes negotiated at the struction) in fact produced one- $20,000-a-year job in the Swedish ship- "Tokyo Round" will help bring third more export revenue for yards, Swedish taxpayers pay an esti- several nontariff barriers under developing countries in 1980 than mated $50,000 annual subsidy. Protection did agricultural exports, although costs Canadian consumers $500 million a international control. These codes year to provide an additional $135 million (listed in the 1980 World Develop- the developing countries' trade of wages in the clothing industry. And ment Report) cover such issues as surplus was smaller for services when Japanese consumers pay eight the determination and enforce- than for agricultural products. times the world price for beef, Japanese ment of product standards, and More significant perhaps is farmers are not made eight times better- whether the traditional approach off. It costs them that much more to pro- the procurement practices of state duce it. agencies and businesses. The to trade liberalization requires objective of these codes is to en- broadening in order to continue to sure transparency and simplicity be effective. This approach, of procedures, so as to minimize embodied in the General Agree- the possibility of discrimination ment on Tariffs and Trade (GATT) not brought participating coun- against foreign sellers. is based on a belief by the par- tries to weigh all the benefits they There are, however, areas where ticipating countries that the politi- derive from trade against the little progress toward trade liberal- cal and economic benefits of open costs. Countries have excluded ization has been made. Agricul- trade would exceed its costs. The certain products from tariff reduc- tural trade is everywhere severely concept on which the tariff nego- tions, not necessarily because the distorted by national price-sup- tiations were based was quite sim- (producers') costs of lower tariffs port and protection policies, plean exchange of concessions would exceed the (consumers') epitomized by the EEC's Common from which each country would gains, but for fear that displaced Agricultural Policy (see box). gain. But these negotiations have producers might trigger domestic political pressure to resist liberal- ization. This viewthat exports are the "gains" from trade and im- Agricultural protection in the European Community ports the "costs"is also reflected The European Community's Common the CAP's total cost to EEC consumers in most countries' safeguards or Agriculture Policy (CAP) is a complex came to $11 billion in 1976. escape clause procedures. In safe- mechanism. The internal prices of major Internal prices have been maintained at guards cases (as recognized by the agricultural products are maintained by levels sufficiently high to maintain self- imposing variable levies on imports or, sufficiency in some products and to lead GATT) the only economic effect when EEC production exceeds demand, to production of exportable surpluses in taken into account is injury to do- by government purchases. Because the others. The most obvious example is mestic producers (see box). internal prices are held constant while sugar, a commodity produced at least cost This shortcoming takes on par- world market prices change with market in the tropics. Because of its price support ticular relevance as the developing conditions, the spread between the two and surplus disposal program, the EEC fluctuates considerably. Thus over the has become the world's leading exporter, countries increase their share of past decade, European buyers have had after Cuba. With the accession of the world trade. Earlier GATT nego- to pay 1.4 to 5 times the world price for Mediterranean countries, a much larger tiations successfully reduced tar- milk powder, 1.5 to 4 times the world share of the EEC's consumption of olive iffs on industrial products traded price for butter, 2.5 times the world price oil, wine, fruit and vegetables will be pro- among industrial countries. But of soft cheese, twice the world price for duced internally and protected from com- this success was largely due to the beef, and 1.5 to 2 times the world price for petition from North African and other grains. developing countries. fact that cost differences were European consumers pay these differ- The EEC surpluses are in part disposed small, and the sectors that bore entials, and they also pay taxes to cover of as food aid, but the intermittent selling the losses were the same ones en- the losses incurred by disposing of sur- of surpluses has the effects of depressing joying the gains. The resulting pluses at world prices or by diverting world prices and displacing established them to inferior uses, such as animal feed exporters. growth of trade tended to be intra- supplements. It has been estimated that industrya country's exports expanded in the same industries 33 in which its imports expanded. sures put in place by the United defining them, put limits on the Other sectors, particularly labor- States; the annual record of gov- exercise of each country's sov- intensive ones where cost dif- ernment industrial aids and trade ereign right to escape. So long as ferences between countries were protection provided by the Indus- the proposals for a new safe- large, experienced minimal tariff tries Assistance Commission in guards code are based on the tra- cuts. Despite faster growth and Australia; and the Federal Re- ditional mercantilist principle fuller employment, reciprocity public of Germany's "Subsidy that a country's interests are from a major supplier was not suf- Report," which records by sector served by trade restrictions which ficient for governments to over- all federal government subsidies reduce immediate injury to do- come resistance from the pro- and also forgone tax revenues mestic producersthese nego- ducer interests that would lose in resulting from industry tax relief. tiations, stalemated at the Tokyo order to achieve the larger con- While the calculation and pub- Round and dormant since then, sumer gains. lication of the costs of protection are unlikely to succeed. The same problem is now will surely influence the general Under present arrangements, emerging in different guise. political climate, legislation may the motive for a country to agree Developing countries that, in be needed to build this informa- to limits on its right to impose restructuring their trade policies, tion into the decision mechanisms trade restrictions is to stop its trad- reduce their import barriers find it through which trade policy is ing partners retaliating. The exer- hard or impossible to obtain administered. cise of the right to escape is then matching concessions from the National governments may find simply a matter of the relative industrial countries. political (and not just economic) power of the importer and the ex- To restore the postwar momen- merits in institutional changes porter. Not surprisingly, the out- tum of trade liberalization, a that allow them to judge trade dis- come in most instances is a "vol- national and international effort to putes in the light of overall costs untary" export restraint agree- base policy on a broader concept and benefits. Under present rules, ment, negotiated between the na- of the gains from trade may be the technical commissions and tional governments. The fact that needed. On national fronts, it is bureaus which adjudicate in trade the present safeguards article has essential to redouble efforts to disputes cannot take consumer hardly ever been invoked shows mobilize those domestic interests interests into account. As a result, how hard it is to confine this clash within the industrial and develop- consumer groups have no alterna- of sovereign power within inter- ing countries that bear the costs of tive but to go "over the heads" of national rules. protection. The safeguards nego- these bureaus and commissions If the safeguards negotiations tiations provide an opportunity to and apply pressure on politicians. were to focus on developing a bring out the same issues on an Trade disputes therefore tend to more balanced concept of injury, international scale. escalate into higher level disputes then the major issue would not be than they would if, at the lower "How much of its sovereign right NATIONAL ACTIONS. To iden- levels, a technical outlet were pro- to restrict imports will a country tify individual products that are vided for consumer as well as for give up?" but "How can the code affected by trade barriers might producer interests. help a country determine when it seem at first glance a trivial task, is in its overall economic interests but it is not. With more subtle THE SAFEGUARDS CLAUSE. The to exercise that right?" This would forms of nontariff protection or GATT embodies a general com- require the international com- industry support programs, sim- mitment by each participating munity to face an issue that it has ply measuring their coverage (let country to keep its market open to always avoided. It is a considera- alone estimating their effects) is foreign sellers. The safeguards (or ble challenge. But the record of even more difficult. escape) clause is, as its name sug- successful negotiations suggests Some government actions have gests, a way out of this commit- that trade policy may be the one helped make such work less diffi- ment. The purpose of an escape area in which few tasks are be- cult. They include the US Trade clause code is to define the circum- yond the powers of determined Action Monitoring System, which stances under which a country international cooperation. tabulates trade restrictive mea- might escape, and it is hoped, by 34 4 Energy: a new era The shift from cheap and abun- (Figure 4.1). Oil and natural gas This pattern could not be sus- dant energy to higher prices and supplied over 80 percent of the tained indefinitely. As the rate of scarcity has been a dominant fea- increase in world use of primary growth of oil consumption began ture of the world economy in the energy between 1950 and 1970. to exceed the growth of additions past decade. The previous chapter Cheap energy made an important to reserves, prices would have showed that over 40 percent of the contribution to the unprece- risen regardless of the way the substantial increase in exports dentedly rapid growth of world world oil market was managed. from oil-importing countries was output. The four-fold rise in nominal oil required to pay for the increased prices that took place in 1973-74 cost of their oil imports. Another was triggered by short-term politi- substantial portion was financed Figure 4.1 Petroleum prices, cal and economic factors and, as by borrowing from the oil-surplus 1950-80 and 1972-80 shown in Figure 4.1, somewhat countries via the capital markets, (annual averages) overshot the real level sustainable which is examined in the next Constant 2980 dollars per barrel by market forces. The 6 percent chapter. 40 cut in world supply triggered by Although some countries can the revolution in Iran produced a adjust to more expensive energy further increase in real prices of 30 by boosting their exports and bor- over 80 percent between 1978 and rowing, for the world as a whole a 1980. However, by the end of the large part of the adjustment must 20 decade petroleum supply and be made more directly, through demand were again closely bal- changes in the supply and anced. demand for energy itself. These 10 World demand take place through substituting other fuels for scarce petroleum, Before 1973 energy consumption reducing the energy required per 01111 I III liii iiiiiil, I ii was growing proportionately to 1950 60 70 80 unit of GDP, and changing rates of GDP in the industrial countries, growth of GDP. These adjust- Dollars per barrel somewhat faster in the developing 40 ments in energy use and the pol- countries. Even so, the latter now icies to bring them about will be account for only 14 percent of examined at both the global and 30 world commercial energy de- national levels. mand; a quarter of their total energy is still supplied by fuel- The energy transition 20 wood and other noncommercial Current prices sources. After 1973 consumption Until 1970 the postwar period was in the industrial countries grew far characterized by rates of discovery 10 less rapidly. While growth in these of oil in the Middle East and countries has recently recovered, elsewhere that were far in excess Constant 1972 prices it is projected to be slower than UI of demand. As a result the real 1972 74 76 78 80 pre-1973 levels throughout the price of petroleum fell steadily 1980s, and slowest of all country 35 groups. In the developing coun- tion in the country groups (see industrial countries. The increase tries, demand has also slowed also Figure 4.2). in prices of imported oil has down, but not as much. As a Although the demand for gradually been passed through to result, their share in total con- energy is quite insensitive to price consumers, cushioned by the sumption will rise to 18 percent by changes in the short term, the slower rise in taxes and in the 1990. This is shown in Table 4.1 1973-74 oil-price increases have prices of other types of energy. In which represents this Reports best already had a marked effect on the main industrial countries, real judgment of the likely levels of energy consumption of oil-im- prices to final users rose by 62 per- energy consumption and produc- porting countries, especially the cent between 1973 and 1979 (Table 4.2). The available data show a similar rise in oil-importing devel- oping countries but much less in Table 4.1 Commercial primary energy production oil-exporting countries. and consumption, by country group, 1970-90 (millions of barrels a day oil equivalent) In the industrial countries, the 1970 1980 1990 rise in consumer prices, combined with governmental actions to con- Pro- Con- Pro- Con- Pro- Con- Country group duction sum ption duction sumpt ion duction sumption serve energy, has already had a Industrial market economies 43.2 60.6 50.6 72.4 64.3 87.0 marked effect on the intensity of Petroleum 12.7 29.9 14.5 35.0 16.4 37.4 energy use. The ratio of their total Natural gas 13.0 12.8 13.8 15.0 13.2 16.2 energy use per thousand dollars Solid fuels 13.0 13.3 13.9 14.0 20.4 19.1 Primary electricity 4.5 4.6 8.4 8.4 14.3 14.3 of GDP has fallen by about 2 per- cent a year between 1973 and 1980. Nonmarket industrial economies 28.8 27.6 45.2 43.0 63.4 62.1 This has meant a saving of about Petroleum 8.0 7.2 13.7 13.1 17.9 17.3 15 percent, or 10 million barrels a Natural gas 3.8 3.8 7.7 7.0 12.6 12.3 day of oil equivalent (mbdoe) in Solid fuels 16.1 15.7 21.8 20.9 29.8 29.4 Primary electricity 0.9 0.9 2.0 2.0 3.1 3.1 1980, compared to the demand Capital-surplus oil exporters 12.8 0.3 18.6 0.9 21.7 1.7 that would have been expected if Petroleum 12.7 0.2 18.3 0.7 20.4 1.1 there had been no increase in real Natural gas 0.1 0.1 0.3 0.2 1.3 0.6 energy prices. Solid fuels Primary electricity The main factors affecting Developing countries demand for energy can be divided Oil exporters 13.7 2.8 16.7 5.5 25.2 10.0 into an income effect and a price Petroleum 12.7 1.8 14.2 3.6 18.3 5.5 effect (with conservation mea- Natural gas 0.7 0.7 2.0 1.4 5.9 3.5 Solid fuels 0.1 0.1 0.1 0.1 0.3 0.3 Primary electricity 0.2 0.2 0.4 0.4 0.7 0.7 Oil importers 4.7 7.8 7.5 13.7 15.1 24.3 Figure 4.2 Commercial primary Petroleum 1.2 4.2 1.5 7.3 2.8 11.2 energy consumption, 1960-90 Natural gas 0.3 0.3 0.5 -0.7 1.6 1.6 Milhonn of barrel, Solid fuels 2.3 2.4 3.5 3.7 5.6 6.4 per day oil 2.0 equivalent Primary electricity 0.9 0.9 2.0 5.1 5.1 500.0 Total world 103.2 99.1 138.6 135.5 189.7 185.1 Petroleum 47.3 43.3 62.2 59.7 75.8 72.5 200.0 Natural gas 17.9 17.7 24.3 24.3 34.6 34.2 Totol Solid fuels 31.5 31.5 39.3 38.7 56.1 55.2 100.0 Primary electricity 6.5 6.6 12.8 12.8 23.2 23.2 4.6 50.0 Bunkers and others 2.9 3.1 Average annual growth rate of world supplies Nonrnarketinri_. (percentages) 20.0 1970-80 1980-90 10.0 Oil-importing developing Total world 3.0 3.2 5.0 Petroleum 2.8 2.0 so Natural gas 3.1 3.6 Oil.exportiog Solid fuels 2.2 3.6 2.0 developing countries Primary electricity 7.0 6.1 10 1960 65 70 75 80 85 90 Note: Total world consumption refers to apparent domestic consumption only. Total world requirements of primary energy equal total world consumption plus bunkers and others. Synthetics from coal are not included in solid fuels. 36 Table 4.2 Index of real energy prices to final users: in 1973 to 4.4 in 1980. This implies a major industrial market economies, 1974-80 medium-term price elasticity of (1973=100) about 0.2, consistent with the Final users 1973 1974 1976 1978 1979 1980 long-term elasticity of 0.4 shown Residential and commercial 100 123 138 146 168 178 in Table 4.3. Industry 100 130 160 170 185 274 Since income growth was also Transport 100 122 119 111 131 156 very slow during this period-2.5 Total 100 125 140 144 162 195 percent a year for the industrial Source: International Energy Agency. countriesthe increase in energy consumption arising from income sures being part of the latter). The percent increase in price has led to growth was relatively small. It was annual increase in energy use can a reduction in energy demand of almost cancelled out by the mod- then be expressed as a function of about 4 percent in the industrial erating effect of higher prices, so income growth and price changes. countries but only 3 percent in the that total energy consumption This simple equation takes the fol- developing countries. The full slowed down considerably. This lowing form: Energy growth effects of higher energy prices will does not mean that energy use equals A times percentage income take place over 15 to 20 years as and income growth have been growth minus B times percentage energy-using equipment is re- price increase. A is defined as the placed. The observed effects of income elasticity, or the rate at price rises over the past seven Figure 4.3 Effects of income and which energy consumption in- years are therefore perhaps half of price on energy consumption in creases relative to increases in the estimated long-term effects. industrial countries, 1960-90 GDP; while B is the price elasticity, The combined effects of past Millio,as of bcerela par doy oil ,quiaclaai the rate at which energy consump- and future changes in income and 138 117 tion decreases as energy becomes price on energy use are illustrated Reduction in consumption Energy intensity due to price increase more costly. in Figures 4.3 and 4.4 and in Table 87 Income elasticities tend to be 4.4. The shaded portion of each 1973 higher in developing countries figure indicates the savings in 69 than in industrial ones, reflecting energy demand brought about as the rapid increases in industrial- higher prices have curbed energy ization and urbanization that consumption. The parallel 45- accompany the early stages of degree lines show energy con- growth. For every percentage sumption and GDP growing at the itO 119 GDP ado, 140 170 200 point increase in income, energy same rate ("constant energy inten- a Ocarels per 01.000 GDP consumption rises by about 1.3 sity"). The points for each year percent in developing countries, show projected energy consump- compared to 1.0 percent in indus- tion and GDP and reflect the way trial countries (Table 4.3). in which higher prices offset the "uncoupled": the effect of rising Price elasticities tend to be effects of income growth, result- income is again likely to predomi- somewhat lower: over the range of ing in lower energy intensities. nate when the industrial econo- prices experienced to date, each 10 The industrial countries. Both mies return to their earlier, more GDP and energy use were increas- buoyant growth, and as price ing at about 5 percent a year before increases become more moderate. 1973, and the average intensity of Looking ahead to 1990, a further Table 4.3 Typical income and reduction in energy intensityto long-term price elasticities for their energy use was relatively energy constant at 5.0 barrels of oil equiv- 3.7 barrels per $1,000 of GDPis alent per $1,000 of GDP (see Figure anticipated in the industrial coun- Income Price elasticity elasticity 4.3). In the absence of any increase tries as they continue to adjust to Industrial in prices, energy consumption higher prices. Should this occur, market 1.0 0.4 would have risen to some 117 GDP growth of 3.7 percent a year economies (0.2-0.6) mbdoe by 1990. Because of the dra- would be supported by energy- Developing 1.3 0.3 countries (0.1-0.5) matic price increases, however, consumption growth of only 2 a. At user prices. The range of estimates is energy intensities have fallen percent a year, less than half as indicated in parentheses. from 5.0 barrels per $1,000 of GDP much as in the years before 1973. 37 The oil-importing develop- Table 4.4 Commercial energy consumption, 1960-90 ing countries. Notwithstanding (millions of barrels a day oil equivalent) higher prices, energy intensities Projected without will rise between now and 1990 Actual Projected price increase Savings from 4.3 to 4.4 barrels per $1,000 of Country group 1973 1980 1990 1980 1990 1980 1990 GDPbecause the positive effect Industrial market of income growth on consump- economies 69 72 87 82 117 10 30 tion outweighs the moderating Oil importers 10 14 24 15 31 1 7 effect of rising prices (see Figure Rest of world 4.4). This is not to say that rising (including bunkers) 40 53 78 55 85 2 7 prices have no impact; in the World 119 139 189 152 233 13 44 absence of price changes, oil- importing developing countries' growth would have raised their consumption to 31 mbdoe by 1990 the consumption projected for a result, two-thirds of the adjust- instead of the 24 mbdoe that is cur- 1990 with what would have been ment to the slowdown in oil pro- rently projected. Their energy used to sustain the same GDP duction has taken place through intensity would have risen to 5.6 growth with no increase in prices. curbing demand growth and only in 1990, instead of 4.4. (Because of Savings reach 44 mbdoe in 1990, one-third through accelerating the differences in the purchasing equal to just over 20 percent of production of other energy sup- power of GDP, the energy inten- world demand. If there were no plies. In the 1980s, however, the sities of developing and industrial change in the composition of effects of shifts in supply are countries are not strictly compara- energy supply, this would imply a expected to be as important as ble. Converting GDP at the appro- saving of about 20 mbd of changes in demand. priate purchasing power instead petroleum. Two-thirds of this In terms of extra supplies, of at nominal exchange rates reduction is projected to take petroleum will no longer make the which would mean roughly doub- place in the industrial countries, largest contribution. Having pro- ling developing countries' GDP where energy use per person vided more than 60 percent of the would show that their energy in- is the highest and the effect of increment to energy supplies in tensities are substantially below rising prices on demand is most the 1960s, its share is expected to those of the industrial countries.) predictable. continue to shrink (Figure 4.5). By The global effect of rising prices Are rising prices and conserva- the end of the century, it may on total energy demand is esti- lion sufficient to ease the energy account for only 30 percent of mated in Table 4.4 by comparing bottleneck? On these projections, world primary energy, compared the growth of world energy with its peak of 50 percent in 1973. demand would be lowered from This decline will have to be offset 4.0 percent a year to 2.8 percent largely by a revival of coal and from 1973 to 1990, allowing for coal-based fuels and (in the 1990s) Figure 4.4 Effects of income and price on energy consumption in GDP to recover to the High case a significant increase in nuclear oil-importing developing growth rates. However, a com- energy and synthetic fuels. countries, 1960-90 parable adjustment on the supply Although all forms of energy Millions of barrels per day oil equivalent 5.6 side will also be needed to replace can be substituted for each other 36.0 - 31.0 Energy intensity petroleum by more plentiful to some degree, the international 24.0 Reduction in sources of energy so that oil economy is mainly affected by consumption due to price demand can be limited to the what happens to the most trans- amounts likely to be available over portable formschiefly oil and 10.0 5' the next decade. coal. For the next 10 years at least, 1973 the speed with which coal re- Energy supply places oil will largely determine The price rises of the past decade whether energy supplies grow at 4.0.. 3.5 -1960 have attracted heavy investment the 3.2 percent a year needed to 0 48 100 136 231 350 in additional supplies of energy. sustain economic growth. Other GDP niden a. Barroln per 51,000 CD? Inevitably it takes a long time to sourcesmainly natural gas, increase supplies significantly. As hydroelectricity and nuclear 38 powerare expected to provide consumption during the 1980s Figure 4.5 Increments to world 45 percent of the increase in pri- (Table 4.1). In the longer run, energy supply mary energy in the 1980s. But their however, the developing coun- (percentage shares) lead times are so long that they are tries also have considerable scope less responsive to current market for raising coal production. conditions, and most decisions affecting what will come on Petroleum stream in the 1980s have already Petroleum's dominant role in total been taken. The following discus- energy supply derives from sev- sion therefore concentrates on eral factors. It is the most versatile coal and petroleum. form of energy, is relatively clean and is easily transportable (con- Coal stituting some 90 percent of inter- World reserves of coal far exceed national energy trade). While oil 1960s those of petroleum. At present readily replaced coal in the 1950s prices, some 640 billion tons of and 1960s, it is much harder to (1.4) proven reserves are economically reverse this process. recoverable, enough to maintain In 1970 the 13 members of the (10.3) )7.2)'HydrO current production levels for over Organization of Petroleum Ex- NucIear' a hundred years. About 90 per- porting Countries (OPEC) pro- (41.4) 's Petroleum cent of the production and use of duced half of the world's petro- (21.9) coal is in the industrial economies, leum and held three-quarters of (17.8) market and nonmarket. The limits the world's reserves. The subse- Natural gas to coal expansion lie in the need quent transfer of ownership of oil- for large investments in transport, producing facilities to the gov- 1970s coal-using equipment and pollu- ernments of these countries has tion control. had several long-term effects on Coal production is expected to petroleum supplies. Most funda- (8.9) grow more rapidly than oil during mentally, supply decisions are (18.5) Primary Other the 1980sat about 3.6 percent now viewed as part of the overall electricity (13.7) (24.8) compared to just over 2 percent in development strategy of each Hydro Petroleum the 1970sand coal and coal- country (discussed in Chapter 6). Nuclear )4.8i based fuels will replace oil as the The larger, more populous, and (18.4) main source of energy growth. more diversified economies such (30.0) Natural Liquids from heavy oils and oil as Algeria, Indonesia, Iran, Vene- gas shale as well as gas produced from zuela and Nigeria, have been able coal should also become competi- to spend their increased revenues tive with petroleum. This substi- and so tend to maximize their oil 1980s tution should have a restraining production. But the countries effect on further increases in with substantial production and Petroleum petroleum prices. reserves in relation to their devel- Replacing oil with coal is a more opment needsSaudi Arabia, immediate option for the indus- Iraq, Kuwait, the United Arab trial than for the developing coun- Emirates, Libya and Qatarhave (20.6) Primary tries (with a few notable excep- been able to expand imports electricity tions, such as China and India, rapidly without spending all of which are already major pro- their petroleum revenues. This ducers). Most of the shift from oil group now produces two-thirds to coal is therefore expected to of OPEC supplies, playing a piv- take place in the industrial coun- otal role in the world petroleum tries. Although there will be some market. 1990s substitution in developing coun- The behavior of the capital-sur- tries, they will continue to rely on plus countries is critical not only oil for about half of their energy for world energy markets but also 39 for determining the future size of factors such as the softening of rels of oil per day and represents OPEC surpluses and the corre- prices in mid-1981. roughly one-quarter of the energy sponding deficits in oil-importing used in developing countries, and countries. Over time the problem The special problems of just under 5 percent of the world's of recycling oil surpluses is likely traditional fuels energy consumption. to decrease, however, as the The growing scarcity of tradi- development needs of the surplus While rising petroleum prices tional fuels is the energy crisis in countries absorb more of their rev- have captured the headlines, for much of the developing world. enues. This question is considered almost half of the world's popula- Shortages are not a new problem further in the following chapter. tion energy problems take the in those parts of Asia, Africa and The six capital-surplus coun- form of a daily search for wood Latin America, where population tries have now accumulated some with which to cook food. Over 2 growth and the need to clear land $300 billion of foreign assets. billion people still depend almost for agricultural use have long put Although these assets represent a entirely on wood and other tradi- pressure on forests. But they are desirable diversification of their tional fuels, including crop and now much exacerbated as the wealth, their rates of return have animal wastes. In rural areas, low- higher prices of conventional been well below the rate of appre- income households use only tradi- energy raise the demand for tradi- ciation in the value of their oil tional energy. In many developing tional fuels, especially for charcoal reserves. The surplus countries countries, industry also relies in urban areas. And demand for have now lowered their produc- heavily on fuelwood, and in construction materials and pulp tion targets by 2 million to 3 mil- some countriesMali, Tanzania, and paper, of course, continues to lion barrels a day (mbd) from their Nepal, Ethiopia and Haiti are ex- grow. past production level of about 19 amplestraditional fuels repre- Iii many densely populated mbd; they have the capacity to sent over 90 percent of total areas, forests have dangerously produce 5 mbd to 6 mbd more energy consumption. shrunk. The hillsides of Nepal are than their targets. This margin The quantities involved are washing away as the demand for will tend to narrow as the imports large (Figure 4.6). Perhaps as fodder and firewood rises, and needed for further development much as 930 million cubic meters more land is given over to agricul- rise. But it can also be increased by of wood, 400 tons of animal waste ture. The use of wood for fuel is enhanced recovery and further and the same amount of crop resi- greater than sustainable forest exploration work, currently at a dues are being burned in develop- yields in several African and low level. ing countries every year. This is Asian countries. In many more, The effects of the somewhat equivalent to almost 5 million bar- localized deforestation is a serious diverse objectives within OPEC problem because fuelwood cannot have so far maintained upward be transported economically over pressure on prices when markets long distances. In Zaire, for exam- are tight while prices lag behind Figure 4.6 Consumption of ple, only 2 percent of sustainable the rate of international inflation traditional and nontraditional fuels in developing countries forest yields are cut down every in slack periods. Oil prices have year, but wood is very scarce now reached levels at which vari- Millions of barrels a day oil equivalent around Kinshasa. A virtual desert ous alternative sources of supply commercial has been created for at least 70 are competitive with oila fact Oil-exporting countries fuels kilometers around Niamey, the 10.0 that countries with substantial Oil-importing countries capital of Niger. In their search for reserves can be expected to take fuel, people may even cut fruit- into account when planning their bearing trees, seedlings and tree Con,mercial output. These various factors fuels roots, combine to produce the central 5.5 As forests disappear, people in price assumption adopted in this rural areas spend more time col- 13.7 Reportan annual increase of Tradi ional Tradi jonal lecting fuel, at the cost of working about 3 percent in real terms from fuels fuels 1.7 1.8 on the land. The poorest are the 1980 to 1990, from $30.50 to $42 in 4.9 5.3 worst affected, since they can least constant 1980 dollars. Given this afford to buy fuel. Iii parts of long-term perspective, the projec- 1980 1990 Africa, purchasing fuel can cost a tions should remain unaffected by poor family 35 to 40 percent of its 40 income and people have been reduced to only one cooked meal a Trees for people: a participatory solution day. In poor areas of Nepal and In 1971 the South Korean government comparatively quick returns. Seedlings Haiti, cropping patterns have introduced a reforestation program under were distributed free; new and versatile even changed in favor of foods the driving force of the Saemaeul Udong species, such as leucaena and eucalyptus that require less cooking. [New Community] movement. The pro- were introduced. With modern cultiva- gram involved a campaign of public edu- tion, they yield 5 to 15 times more than As wood becomes scarce, peo- traditional trees, and can often grow on cation to encourage tree-growing and ple burn more dung and crop conservation, provision of free seedlings, land not suitable for other crops. wastes, which would be better a scheme for plantations in every village, The program has had considerable suc- usd as fertilizers. As a result, greater support for the Forest Depart- cess in encouraging individual farmers to yields fall, so creating pressure to ment, a new forest law, and enforcement plant trees. In 1980, 50 million seedlings of the ban on leaf-raking and removing were distributed, but that failed to satisfy bring more land under cultivation. demand. However, efforts to accelerate undergrowth in forests. But when trees and other vegeta- By the time World Bank assistance was planting on village common land have tion are removed, the soil is sought for the program's expansion in not fared so well. They have run into diffi- eroded and river beds and canals 1976, nearly 40,000 hectares of trees were culties over the availability of land; rela- silt up. Finally, deforestation being planted each year. That success was tively few Panchayats (village councils) in in large measure due to the involvement Gujarat have enough common land to use reduces the earth's capacity to for trees without affecting villagers' other of villagers. Although the program was absorb the extra carbon dioxide implemented by governmental agencies, needs. Moreover, Panchayats sometimes caused by burning fossil fuels. their main role was to provide money and decide to establish community lots This can raise global temperatures technical advice. By linking with village without consulting other villagers, and and affect the weather. and district committees, they developed the wood is often sold to meet other The gravity of the fuelwood cri- plans in accordance with village pri- village needs rather than directly used by orities. the villagers. Regardless of government sis can therefore hardly be over- In Gujarat, India, the Forest Depart- commitment, social forestry will succeed stated. It can be tackled in three ment's program of reforestation included only where local people are consulted ways: a publicity campaign that showed vil- and participate. S Planting more trees. The use lagers that trees could be grown with of modern agricultural methods and new species of trees is a rela- tively new phenomenon in many does little to satisfy immediate buy a "cheap" stove. Charcoal is parts of the world. Experience has wood needs, it is often difficult to typically produced by felling live shown, however, that "tree farm- enlist the cooperation of farmers trees and burning them on the ing" is feasible and profitable and landless laborers, especially if spot in sand-covered pits. It in a variety of circumstances. But they are not assured of their rights would be much more efficient to progress in creating additional to the mature trees. People cannot burn the wood in kilns, but high wood resources has been slow. To be forced to grow trees. They must costs and poorly adapted tech- meet likely fuelwood demand in believe that it will meet their nologies have so far prevented developing countries without needs, as examples of South Korea that from happening. further damage to forests would and the Indian state of Gujarat Substituting other energy for require an estimated 20 million to demonstrate (see box). traditional fuels. This has been 25 million hectares of forests to be Improving the efficiency of made much more difficult by the planted during the next 20 years. energy use. If people use tradi- sharp price increases for commer- At present rates of planting, only tional stoves, 90 percent of heat cial fuels over the past eight years. one-tenth of that target will be met. may be wasted while open fires The prices that would enable poor Reforestation mainly involves use five times as much energy as families to use even minimal land, labor and time. Rural people kerosene stoves. Small improve- amounts of commercial energy are themselves therefore have the ments in chimney and stove much lower than the prices re- potential to do the job, and rela- design could double the useful quired for economic efficiency. tively cheaply. Designing forestry energy obtained from fuelwood, Nonetheless, many governments projects to achieve this potential, but they have been made only have subsidized fuels such as however, presents special prob- slowly. Designs and operating kerosene and diesel, typically lems. Forests compete with land methods have not always taken used by poor consumers. for food crops or grazing, so that local conditions and tastes into While this may be a useful inter- wooded areas have to be carefully account, and poor families often im solution for the poor, it creates selected. Moreover, since planting cannot afford the $3 to $5 it costs to many additional problems. It has 41 not been possible to confine such conclusion that, until 1978 at least, prices might affect their growth subsidies to those who need the impact of higher oil prices on and development prospects is a them. Vehicle engines can be con- the growth rates of the oil-import- matter of great concern. verted to the use of the cheaper ing developing countries was rel- fuels, and it is common for sub- atively modest, largely because Impact of higher energy costs sidized fuels sold in rural areas to trading opportunities, workers' The most immediate effect of find their way back to the towns remittances, and capital flows, higher energy prices is to reduce and cities. More importantly, large both commercial and Official the real incomes or profits of numbers of consumers receive the Development Assistance (ODA), energy users. To the extent that wrong price signals; they give lit- expanded sufficiently to offset this higher prices cannot be passed on, tle incentive to promote con- external shock to a considerable energy users will try to modify servation or reduce imports, and extent. their behavior to minimize the budgetary costs can quickly be- What can be inferred from this losses involved. They will sub- come prohibitive. for the 1980s? The 1979-80 oil- stitute less for more expensive There is no single solution to price increase has produced fuels and alter production meth- the special problem of energy for unsustainable trade deficits for ods to use more energy-efficient the poor. Many considerations, the oil-importing developing technology. Consumption pat- among them the cost of subsidies countries. In 1980, their net fuel terns will also change. and urgency of deforestation, will import bill amounted to 5.3 per- How easily such adjustments have to be balanced, and policies cent of GDP ($74 billion), com- can take place is not yet clear. will be different in different coun- pared with 2.8 percent of GDP in Studies based on the experience of tries. In some places, biogas units 1978. This is projected to rise fur- the industrial countries suggest have been introduced with some ther to 6.2 percent of GDP by 1990. that in the long run higher energy success. Other countries have In some countries like Brazil, prices will not have a drastic effect experimented with additives to Turkey and India, oil imports now on growth. However, the studies' subsidized fuels so as to make absorb over 50 percent of export long-term view understates the them harm combustion engines. earnings. While trade and capital costs of disruptions and balance- In short, the links between flows will help to reduce and of-payment difficulties of the kind prices, income distribution and finance these deficits, increasing that occurred in the 1970s. environmental considerations adjustments will have to take Neither can their results neces- represent a particularly intractable place in the energy sphere. At the sarily be applied to the oil-import- energy problem. The conflict domestic level, higher interna- ing developing countries. It may between the needs of poor people tional prices have now largely be much harder to substitute labor, for affordable energy, and fuel been translated into the domestic capital and other raw materials for development, which requires price increases needed to stimu- energy in developing countries higher prices, is somewhat sim- late adjustment. The effects of this than in the industrial countries. ilar to the food-price problem will be felt throughout the econo- For example, the introduction of described in Chapter 7. The solu- mies of the oil-importing develop- energy-efficient techniques may tion is far from obvious. What is ing countries. Yet their current be hampered by shortages of clear, however, is that the majority energy use is low and is bound to skilled technicians and managers, of poor rural families will remain rise. Their "energy intensity" or the infrastructure required to dependent on fuelwood and the amount of commercial energy use alternative fuels. organic wastes for the foreseeable consumed per unit of outputis The oil-importing developing future. Unless that challenge is less than that of the industrial countries seem to have one advan- faced, the burden of the "other countries, due to, among other tage over the industrial countries; energy crisis" on those who are reasons, continued importance of they are not yet locked into a stock least able to bear it will continue to traditional fuels and industry's of energy-intensive capital and grow. small share in total output. infrastructure and therefore, in The oil-importing developing principle, may be better able to Energy and growth countries are therefore expected expand while economizing on to raise their energy consumption energy. But, with scarce capital This Report's discussion of individ- from 13.7 mbdoe in 1980 to 24.3 resources and balance-of-pay- ual countries (Chapter 6) high- mbdoe in 1990. Given this pattern, ments constraints, they may not lights the somewhat surprising the extent to which higher oil actually be able to implement the 42 options open to them. Their gen- For industry as a whole, energy's bespeaking the essential nature of erally low levels of energy use sug- share of production costs varies its use. To grow rapidly, they will gest that much of it is "essential," from 2 percent to about 8 percent. need to use much more energy. so they have less scope than the Certain industries are particularly industrial countries to curb con- heavy users of energyfor exam- Energy policy sumption without affecting ple, aluminum, copper refining, growth. Faster growth and rapid fertilizers and iron and steel. They The oil-importing developing investment is the best way of seldom account for more than a countries will have only a margi- ensuring that the developing small fraction of total industrial nal influence on the world's corritries adopt energy-efficient output in the developing coun- energy future, which will con- technologies. tries. But, for some countries, they tinue to be dominated by the The initial impact of more costly are leading export industries and policies and actions of the indus- energy is related to the share of often the biggest source of tax trial countries and the capital- energy in GD?. For oil-importing revenues. It will make increasing surplus oil exporters. The devel- developing countries, that share sense for countries that have oping countries therefore need to was about 4 to 5 percent before cheap or nontradeable energy adjust to world conditions and, in 1973 and is projected to reach (such as natural gas and hydro- doing so, will significantly im- about 10 to 12 percent of GD? by electricity) to exploit their advan- prove their individual perform- 1990 (even after adjustments to tages in these industries. Coun- ance. In the energy field, the key higher prices have been made). tries that are less well-placed to elements of their adjustment That would represent a potential support these energy-intensive include: GD? loss of some 5 to 8 percent industries may suffer. But for most a strategy for energy use inte- over the period, perhaps half a countries, the impact of higher grated into a country's overall percentage point a year. For many energy prices on comparative planning framework and develop- oil-importing developing coun- advantage will be broadly neutral ment objectives; tries, that is the difference since competitors all face similar a vigorous program to sub- between rising and stagnating cost increases. stitute indigenous energy, includ- income per person. Similar con- ing hydroelectric power, coal, clusions were reached in the Rethinking development? fuelwood and domestic oil and simulations in Chapter 2. It has often been asserted that gas, for imported oil (domestic Higher energy costs affect the costly energy has made the indus- production of energy in the oil- various sectors in different ways. trial path to development unsuit- importing developing countries Transport, for example, is likely to able for developing countries. can and should be doubled be- be most affected directly, as fuel This assertion is not borne out by tween 1980 and 1990); makes up some 15 to 30 percent of the facts. To achieve satisfactory mobilization of the resources total costs, with virtually no scope growth, a proper balance must to carry out this vast program of for substitution between fuels or still be struck between industry domestic energy production, esti- factors of production. and agriculture. But, on their mated to cost up to $50 billion a In agriculture, commercial own, higher energy prices will not year in the 1980s, compared to $20 energy accounts for no more than prevent industrialization and billion a year in the past five years; 5 percent of purchased inputs in overall growth, although there and most developing countries. Even will be some changes in compar- a major conservation effort, though modern methods of farm- ative advantage, and slower employing both price and non- inginvolving use of high-yield- growth while countries make the price policies. ing varieties, fertilizers, irrigation heavy investments needed to and pesticidesuse substantial adapt to expensive energy. Their Development strategy amounts of energy, their profit- feasible long-term growth rate Energy policies need not possess ability is such that higher energy may be somewhat lower than any unique characteristics. They prices are likely to have a relatively before, and they may find indus- share a common goal with other limited effect on output. And, trializing significantly more diffi- economic and social programs while more energy-intensive per cult. But the long-term outlook promoting long-term develop- hectare, such modern methods has not been fundamentally ment. Economizing on energy typically use less energy per unit altered. Energy consumption is should not be regarded as an abso- of food produced. low in developing countries, lute virtue; it is desirable only for 43 the contribution it can make to this larger objective. Thus planning Reserves and resources and policy making in all areas All of the energy within the earth is called same field with some certainty. Those are industry, transport, agriculture the resource base, Of this, only a small part called indica fed reserves. On the basis of and rural developmentshould (known as proven reserves), consists of information gleaned from exploratory be attuned to higher energy costs. deposits that have been discovered and drilling, plus considerable geological can be exploited with the existing tech- extrapolation, the existence of further But higher prices do not mean, for nology. In the case of oil and gas, they are reserves, also producible at current prices example, that developing coun- those reserves that can flow now from and costs, can be inferred (though with tries should eschew all energy- existing wells in already developed reser- errors of up to several orders of magni- intensive industries. "Good eco- voirs. As more wells are drilled into a tude). Both indicated and inferred re- nomics" still implies minimizing reservoir, the estimate of proven reserves serves are classified as unproven. may be revised up or down. The ultimate In addition to economically producible total costs, not simply energy potential of a field may be up to twice that energy resources, exploratory drilling costs. of initial estimates. may confirm the presence of other de- Since reservoirs in an oil field are geo- posits. If these are not exploitable at cur- logically (if not physically) related, lim- rent prices or with existing technology, Increasing energy supplies ited drilling can usually determine the they are designated subeconotnic. Some of extent of additional oil and gas in the them may become economic as prices Policies to encourage energy pro- rise; the rest are the unrecoverable reserves duction are critical for continued left behind in reservoirs. economic growth. The oil-import- As yet undiscovered resources may exist ing developing countries must The classification of reserves and resources where exploratory drilling has not yet take further steps to identify and taken place but where geological and other data provide suggestive evidence. assess the domestic oil, gas, coal, Direove,nd Undiscovered Estimates of undiscovered resources are hydropower, uranium, oil-shale proven iredicetod jofee,,d inevitably highly uncertain. and tar sands that, at higher These categories are themselves poor prices, can now be economically RESERVES UNDISCOVERED RESOURCES guides to the availability of energy for exploited. Smaller scale renewable Economicatfievree prices consumption. If energy is needed for scbcc000tnl,l immediate consumption, then proven energy, such as solar, wind and Uore,ocereblr reserves considerably overstate how biomass, also merit attention. much is available. To the consumer, deliv- What are the prospects for the TOTAL RESOURCE BASE erable energy, not reserves or resources, various fuels? In oil and gas they Leeser geological knocnlpdge matters; this depends not on wells or geo- are good relative to many oil- Act, Mlnptvd l,vt US C,t,l,gket Sttv,, logical data, but on the pipelines, railways importing developing countries' and tankers that move it about. own needs. Their proven reserves represent about 2 percent of the world's total. But because the cheapest suppliesfrom large 1980s; a few will become self-suffi- structure and transport facilities. fields and those close to the oil cient. Estimates also indicate that During the 1980s, only 29 develop- companies' major marketswere by 1990, production of natural gas ing countries are expected to pro- developed first, the oil and gas could triple to 1.6 mbdoe. duce coal. Their production will potential in oil-importing devel- With the exception of a few average 4.6 mbdoe, most of it com- oping countries may as yet be countries, little is known of coal ing from existing producers. underestimated (see box). Their prospects in the developing As for electricity, nuclear power oil production is now 1.5 mbd; world. Developing countries' which now supplies just under it is projected to increase to reserves are an estimated 10 per- 2 percent of the electricity in de- 2.8 mbd by 1990 but could reach cent of the world total, but this veloping countriesis an option 4.8 mbd with greater exploration share should grow as exploration open only to very large countries. and investment. A number of accelerates. The increase in oil Its capital cost is high, and smaller countries (Barbados, Brazil, Chile, prices since 1973 has not signifi- countries do not have grids with Colombia, Ghana, Guatemala, cantly speeded up coal production the minimum capacitysome India, Ivory Coast, Morocco, in the developing countries be- 6,000 MWto handle the mini- Pakistan, Philippines, Thailand, cause of the time required to mum reactor output efficiently. If Turkey and Yugoslavia) will explore, develop and bring coal countries also lack the skilled reduce their dependence on mines into production and to labor and management needed for imports significantly during the install the associated infra- a nuclear program, the peculiar 44 Figure 4.7 Comparative costs of International hydro production Developing countries have substantial small power markets. Exporting power (1980 dollars) scope to exploit the hydroelectric poten- via regional transmission systems to Fuel technologies tial of international rivers. This has nearby countries, such as India or Zim- already been done in various places babwe, makes a great deal of sense. Production cost Unfortunately, such potential buyers are including on the Danube (the Iron Gates in dollars per barrel of oil Fuel technologtes projects) benefiting Romania and understandably reluctant to become equivalent Yugoslavia, and on the Parana River overly vulnerable to outside supply. coal (Yacyreta and Itaipu projects) for the com- Because of such difficulties, the natural gas development of international hydro is far sands mon benefit of Paraguay, Brazil and Less than 30 Argentina. Other projects, such as the likely to continue to be slow. However, oil shale oil sands Nangbeto project for Togo and Bénin and the potential benefits from these projects liquefied natural gas the Mano River project for Liberia and are so considerable that every case should light Arabian crude" svood to methanol Sierra Leone, are under studyand still be explored. For example, Nepal's esti- coal liquefaction more could be, for example, on the mated 80,000 MW hydro potential is a 31-55 S coal gasification, medium-BTU Ganges, Mekong and Salween. Installed thousand times greater than that coun- gas wood to ethanol capacity costs on large integrated projects try's present power needs, and will be sugar to alcohol" may be as little as one-half the capacity wasted for centuries unless it can be coal gasification. high-BTU gas cost of installing similar amounts of developed for India's market which could 56-85 coal to methanol absorb the output in several decades. Mothil M gasoline power in many smaller-scale projects. These projects are not easy. Under ideal Similarly, the 4,800 MW potential of the - and S woitd to high'BTU gas manure to high-BTU gas circumstances, power facilities can be Pa Mong site, shared by Laos and Thai- above corn to ethanol installed in each country with equitable land, is about equal to Thailand's present division of available flows, such as took installed generating capacity and would Power technologies place in the Iron Gates project. However, offer economies of scale over smaller Generation site conditions may require locating the hydro sites as well as conserving Thai- cost in cents per Power technologies power facilities in one country, as in the land's gas and lignite resources now kwh case of Yacyreta, and the contractual ar- assigned to future thermal stations. nuclear, light water reactor rangements for investment sharing, plant Many such options are being studied, geothermal, steam ownership and power delivery fre- and some progress is being made. conventional coal-fired plant Less than 4.0 conventional natural-gas-fired quently require delicate negotiations, However, though attractive in theory, plant often delaying implementation by years. international hydro remains prey to the hydroelectricity A different set of issues is raised by many problems that arise whenever atmospheric fluidized bed international cooperation is required. combustion countries such as Nepal or Zaire which pressurized fluidized bed have huge hydro potentials but relatively combustion 41-6.5 geothermal, brine magnelohydrodynamics breeder reactor conventional oil-fired plant combined cycle, Nit. 2 distillate combined cycle, integrated coal There are better prospects in large, cost-effective energy source 6 6S 0 gasification hydropower. The developing coun- for some time. hiomass (wood chip fuel) fuel cells (low BTU coal gas fuel) tries' hydro resources account for approximately half of the world Capital requirements for energy solar pholovoltaic 8.1 and ocean thermal energy conversion total. Present oil prices justify a development above S uvind solar thermal capacity cost some 1.5 to 3.5 times The capital costs of the oil-import- Note. Costs include all investment requirements and that of recently built hydroplants ing developing countries' energy operation and maintenance costs, including rate of return. Estimates are based on state-of -the-art scale of operation in developing countries. Some of development programs, includ- and U.S. operating conditions. the largest potential hydro proj- ing a doubling of domestic energy Source: Bechtel Delivered to domestic refineries. ects in the world are sited on in- production, will be enormous. Brazilian operating conditions and raw materials costs, ternational waters, but remain Around $40 billion a year (in 1980 unexploited because of political dollars) will be needed between and technical problems (see box now and 1985 (including about $5 above). billion a year for oil and gas. hazards of nuclear energy produc- So far as nontraditional forms Increasing reliance on higher cost tion may make it an unwise of renewable energy are con- supplies will raise the average unit choice. And all must be as con- cernedbiomass and biogas, capital cost of energy production cerned as the industrial countries sun, wind and waterthese may by 50 percent in the 1980s over that about the security and safety of be options in the more distant of the 1970s. This and the higher nuclear plants. future, but are not likely to offer a overall levels of investment will 45 raise the total to more than $50 billion a year (in 1980 dollars) be- Domestic petroleum prices tween 1986 and 1990 (including $7 Governments have traditionally taxed In real terms, international prices of billion for oil and gas). This com- petroleum products heavily because of those three products in 1980 were about pares with the oil-importing de- the presumed low price elasticity and 350 percent above their 1972 levels; but veloping countries' 1980 net fuel high income elasticity of their demand. In domestic prices in oil-importing develop- the 1960s, governments of oil-importing ing countries were only 71 percent higher import bill of $74 billion (in 1980 countries collected nearly four times as and in industrial countries only 62 per- dollars). As a proportion of total much revenue per barrel as did the oil- cent higher. In oil-exporting developing developing country investment, producer governments. countries, there was a real fall of some 30 energy's capital requirements in However, when international oil prices percent. the 1980s may double from 5 per- rose sharply in the mid-1970s, govern- cent in the past five years (about ments were reluctant to increase them Ratio of domestic petroleum product further by additional indirect taxation. prices to international prices, 1972-80 $20 billion a year in 1980 dollars) to The table compares international and Industrial closer to 10 percent. domestic prices of gasoline, kerosene and market Oil Oil Few countries could achieve fuel oil in 53 countries, and shows how Year economies importers exporters these increases in energy invest- governments used the large tax element 1972 3.3 2.7 1.7 in domestic prices to cushion the impact 1978 2.0 1.8 0.5 ment without affecting growth in 1980 1.6 1.4 0.3 of oil-price increases. the rest of the economy. So if the investments are to be made with- out major internal dislocation, substantial capital inflows and energy conservation and substitu- in energy are under less immedi- technical assistance will be re- tion of one fuel for another, and to ate pressure to raise domestic quired, even with major increases ensure that energy users are given energy prices, and the arguments in domestic savings. appropriate signals for longer for energy conservation through term decisions, will be an integral price increases are not easy to Prices part of energy policy. communicate to populations The impact of higher energy prices Energy is so pervasively used in acutely aware of their country's on inflation may make govern- every economy that nonprice petroleum wealth. By delaying ments cautious about raising mechanisms to encourage con- price increases, however, they prices. Similarly, higher prices servation and substitution would lose opportunities to earn addi- have strong distributional effects: quickly be overwhelmed. More- tional foreign exchange. More in developing countries, energy over, attempts to protect domestic seriously, they build up energy- takes a larger share of much lower consumers from price increases intensive production methods incomes than it does in industrial typically lead to budgetary costs and consumption and transport countries. Finally, in those coun- that can fuel inflation and quickly patterns that will be difficult to tries where traditional fuels are become prohibitive (see box). The reverse at a later stage. still important, the use of the pric- importance of market prices is ing tool is further complicated by not diminished by the fact that Non price policies the fact that commercial fuels and many important decisions involv- Though a necessary condition, the wood used by rural inhabi- ing energy production and use correct pricing of fuels is often not tants are close substitutes. Raising may not take place through the sufficient to bring about all tne the price of kerosene, for example, market. The decisions made by desired adjustments. First, pric- can shift demand from commer- government planners will be more ing alone cannot reduce a coun- cial fuels onto fuelwood, aggravat- effective if reinforced by correct try's vulnerability to sudden ing the pressure on already en- prices. shortages or dramatic changes, in dangered forests. The difficulty of raising prices in international prices, for example. Nonetheless, maintaining do- those countries that have kept To deal with possible crises, other mestic energy prices at levels re- them down for some time should policies, such as stockpiling and flecting energy's real economic not be underestimated. It would emergency conservation and cost is an important, necessary take a doubling of domestic allocation plans, may be neces- condition for ensuring that coun- prices, in real terms, for four years sary. Second, the response to tries adjust to new realities. Thus, or more to eliminate the subsidies higher energy prices takes consid- appropriate pricing and taxation in some countries. erable time. In some areas, adjust- of energy products to encourage Countries that are self-sufficient ment can be speeded up and mar- 46 ket reactions reinforced through regulation. Examples include Traffic management: two experiments import restrictions on large auto- To reduce the serious traffic congestion in Venezuela has one of the lowest retail mobiles, limits on space-con- central Singapore, the Government intro- prices of gasoline in the world ($0.13 a ditioning temperatures and traffic duced an "Area Licence Scheme" in June gallon). Both gasoline consumption and control. And in other areas, such 1975. All private cars entering a restricted its private car fleet have been increasing central area and carrying fewer than four by more than 10 percent a year. In 1979 as supplying the rural poor with a persons were required to display a about 135,000 of the 549,000 vehicles reg- vigorous forestry program, non- licence. Since March 1980 its cost has been istered in Caracas were driven during price policies are the only means. $2.30 a day. Parking fees were also peak hours, resulting in severe con- How does this translate into increased considerably, and ring roads gestion. specific sectoral policies? In substantially improved. In November 1979, the Venezuelan These measures had a dramatic effect: government decided to ban each car for agriculture, extension services help Before the introduction of the one day a week, the day depending on to spread energy-efficient prac- scheme, an average of 42,790 private cars licence numbers. The number of private tices. In rice production, for exam- entered the restricted zone during the cars operating during peak hours has ple, placing fertilizer directly at the busy morning period; two months after been reduced by more than 20 percent, crop roots can be up to 50 percent the scheme was introduced, this had saving some 1 million liters of gasoline a fallen to 11,130. By 1980, the number of day, about 16 percent of the total daily more efficient than scattering it on cars coming into the zone had increased consumption in Caracas. the soil. In many poor countries to only 13,840. In comparison with the traffic plan in where power shortages are com- More than 50 percent of private cars Singapore, the Caracas experiment has mon, inefficient pumps use much now carry four or more passengers, com- drawbacks. Because gasoline is still so more energy than is actually pared with less than 23 percent before the cheap, traffic restrictions are only short- scheme was introduced, and the propor- term measures and will not stop the vehi- needed. lion of travelers taking buses increased cle fleet from growing rapidly. Traffic con- In industry, improved manage- from 33 percent to 46 percent. gestion is thus likely to recur in four or ment and personnel training has Gasoline consumption has increased five years' time. Nonetheless, nonprice in several countries achieved sig- by only 3.8 percent a year since the measures on their own can help to reduce nificant energy savings within two scheme was introduced, compared to 6.4 demand for oil. percent a year in 1970.-75. to three years. In the middle- income countries, retooling of older energy-inefficient machin- ery can be spurred through tax developing countries. Energy effi- above). In all sectors, but espe- and credit policy. Generally liberal ciency can be achieved through cially in transport, changes in en- investment policies, such as accel- changing the mix of transport ergy consumption will also require erated depreciation, can also help methods, shifting traffic from less substantial public investment. ensure that new equipment to more efficient carriers (such as quickly replaces the older capital public passenger transport) and International policies stock (see box below). increasing load factors. Some Transport is the largest con- countries have had success with The international community has sumer of petroleum in many traffic control schemes (see box an important role to play in help- ing the developing countries to adjust to more expensive energy. Improving industry's energy efficiency The world has a particular interest The cement industry is a good example of cooling. Depending on these factors, the in boosting energy production in potential for energy saving in many heat needed to produce one kilogram of the oil-importing developing developing countries. The kiln section cement clinker ranges from 800 to 1,800 countries because this will: accounts for about 95 percent of the kilocalories. improve the balance of energy industry's total fuel bill. But the actual Similar savings can be made in other amount it uses will depend on the process energy-intensive industriescopper, supply and demand in interna- employed and thus on the nature and ammonia, pulp and paper, and tional markets; moisture content of raw material entering petroleum refining, for example. Tenta- help the oil-importing devel- the kiln; whether the subsequent drying tive estimates suggest that about 15 per- oping countries to ease their and preheating operations are carried out cent of the total projected industrial balance-of-payments difficulties, in the rotary kiln or more efficiently in energy consumption in developing coun- tries in 1990 could be saved by such so avoiding strains in international suspension preheaters; whether calcina- lion takes place in the kiln or in the pre- changes in industrial practices and pro- capital markets; and calciner; and the efficiency of the clinker cesses. allow growth in the oil- importing developing countries to 47 recover, so providing an impor- the poor, are not attractive to pri- private capital into the exploration tant stimulus to world trade. vate capital at all. phase. Finally, multilateral institu- In the energy field above all oth- Multilateral lending institutions tions may be able to help develop- ers, international interests coin- have considerable experience with ing-country governments to see cide closely with those of the energy in developing countries that the gains from increased oil developing countries. and are in a unique position to production will not be wasted Increasing energy production in help remove the many market by inappropriate domestic prices, the developing countries will imperfections that stand in the for example. This knowledge may require assistance from the indus- way of accelerating energy encourage private investors to trial countries. The institutional development; they can help support a project. The role for and informational barriers to find- developing countries to evaluate international financial institutions ing and developing new resources geological risks and to develop to fulfill these needs, serving the in the oil-importing developing exploration strategies; assist oil triple function of promoting countries are often not fully companies and host governments development, easing energy mar- appreciated. Foreign oil com- in reaching agreement on joint kets and recycling capital, is thus panies are sometimes reluctant to exploration and exploitation and clear. do business in oil-importing provide reassurance to both par- For the eventuality of future developing countries, fearing ties that political risks can be mini- world shortages, other interna- changes in the rules once signifi- mized. tional initiatives will be needed. cant discoveries are made. Their The infrastructure financed by The oil-importing developing interest is also dampened by the multilateral institutions can also countries, which are now among fact that most future discoveries encourage private companies to the first to be pushed into the are expected to be relatively small expand exploratory work. One high-priced spot market, should and more suited to import sub- study estimates that where basic be included in some cooperative stitution than to filling the multi- infrastructure must be put in place allocation scheme of the kind nationals' need for stable crude before exploration or develop- administered by the International supplies. Moreover, increasingly, ment can occur, the costs of a pro- Energy Agency for the industrial exploration must take place in ject may become four or five times countries. This would not only difficult geological or remote what they would otherwise be. guarantee them oil in the event of offshore areas, to which it is Multilateral lending institutions an emergency or supply disrup- difficult to attract risk capital. can also have an important lever- tion but would also help stabilize Finally, certain types of projects, aging effect: their contribution can markets and give all participants which are especially important for be boosted by attracting additional additional security. 48 5 External finance for adjustment and growth In the 1960s and early 1970s ing countries had to borrow to foreign capital financed 10 to 20 cover their much enlarged current Figure 5.1 Middle-income oil percent of total investment in deficits (Table 5.1 and Figure 5.1). importers' current account deficit, 1970-80 developing countries. Most of Between 1973 and 1975 the trade these flows came from official or deficit of the oil importers rose 3.3 Billions of 1978 IdIots 350 semi-official sources in the form of times in real terms or, as measured Low-income oil importers grants, concessional loans and in relation to their GNP, peaked to 30 market loans. Private finance con- the 5 percent level by 1975. The 300 25 sisted largely of suppliers' credits deficit of the low-income countries 20 and direct foreign investments. increased 2.2 times in real terms 15 Even before 1970, this pattern between 1973 and 1975. The low- 250 10 111111111 1970 75 80 was gradually changing. The con- income countries were less af- tribution of private bank lend- fected largely because oil formed - Imports of goods and all services 200 ing increased rapidly after 1967 a smaller part of their total im- while workers' remittances ports. In addition, some low- Current account drficil' (though conventionally classified income African countries bene- 150 as "current receipts") also became fited from a rise in their exports in Purchasing power of exports of goods an important item of external 1973-74, and there were good har- and all services finance for several countries in vests in South Asia in 1975. 100 I I 1970 72 74 76 78 80 Southern Europe and North The wider financing gap was Includes private transfers. Africa. Dramatic changes occur- bridged initially by extra aid from Excludes official transfers. red in 1973-75 when the develop- industrial countries, more lending Table 5.1 Oil-importing developing countries' current account deficit and finance sources, 1970-80 (billions of 1978 dollars) Oil importers Low-income Middle-income Item 1970 1973 1975 1978 1980 1970 1973 1975 1978 1980 Current account deficita 3.6 4.9 7.0 5.1 9.1 14.9 6.7 42.8 20.4 48.9 Financed by: Net capital flows ODA 3.4 4.1 6.6 5.1 5.7 3.3 5.3 5.3 6.5 7.9 Private direct investment 0.3 0.2 0.4 0.2 0.2 3.4 5.1 3.8 4.6 45 Commercial loans 0.5 0.6 0.8 0.9 0.7 8.9 13.7 21.0 29.4 27.1 Changes in reserves and short-term borrowing' -0.5 -1.1 -.0.7 -1.1 2.4 -0.8 -11.7 12.7 -20.1 9.5 Memorandum item: Current account deficit as percentage of GNP 1.9 2.4 3.9 2.6 4.5 2.6 1.0 5.5 2.3 5.0 Excludes net official transfers (grants), which are included in capital flows. A minus sign (-) indicates an increase in reserves. 49 by international financial institu- and with particular concern to the by borrowing at commercial tions and depletion of reserves. needs of those countries identified terms. But the various channels through as "most seriously affected." Although the international which the oil exporters' surpluses OECD donors increased their response to the difficulties of were recycled became increas- aid by 52 percent in two years, 1973-75 was encouraging, during ingly important. Oil producers from a historically low 0.29 per- the second half of the 1970s ODA increased their aid; remittances cent of their GNP in 1973 to 0.36 receipts grew slowly; in the case of from migrant workers in the Mid- percent in 1975. OPEC members the low-income oil importers, dle East became a significant increased their aid even more they actually declined in real source of foreign exchange for rapidly; it rose to $5.5 billion in terms. By 1980 ODA from the many countries; there was a spec- tacular increase in commercial bank lending to the middle- income countries (Figure 5.2). Figure 5.2 Oil-importing developing countries' sources and uses of Oil importers' trade deficits financial flows reached their peak in real terms in Billions of 1978 dollars 1975; over the next three years, 100 their deficits were almost halved. 80 The 1979-80 rise in oil prices again 60 put pressure on the oil importers' 40 Resource transfer balance of payments. In 1979-80, 20 Interest payments although oil prices rose only 63 0 Change in reserves and short-term debt percent as much as they had in 20 Officiat Devetopment Assistance 1973-74, the corresponding in- 40 -Medium and long-term commercial tnans 60 -Peivate direct investment crease in the trade deficits of the '-..,..-Workers' remittances oil importers was higher because 80 - Sources 100 oil accounted for a much higher 1970 71 72 73 74 75 76 77 78 79 80 share of the total cost of imports. a. Includes workers' remittances. The oil importers have financed a large part of the increase in their deficits between 1978 and 1980 by drawing from their reserves and by short-term borrowings. But 1975, 27 percent of all Official OECD countries was little higher this is only a temporary solution. Development Assistance (ODA). as a proportion of their GNP than In the medium and long term, the The International Monetary it had been in 1975, and only about developing countries will have to Fund (IMF) arranged two oil half of the 0.70 percent of GNP adjust to the recent and antici- facilities to help recycle surpluses most of them had accepted as a pated changes in the international accumulated by OPEC and some target. Their collective perform- economy by paying for higher OECD economies. An interest ance is heavily influenced by the priced oil through a transfer of subsidy reduced the cost of disappointing record of the largest goodsthat is, by reducing con- finance to low-income countries. donor. In 1980 their aid was 0.43 sumption below what it otherwise The multilateral banks increased percent of their GNP, excluding would be. This chapter considers their commitments by 46 percent the United States (0.27 percent of the role external finance can play in 1974 and 21 percent in 1975. In GNP). Sweden, Norway, Den- in easing adjustment while main- addition, both bilateral and mark and the Netherlands taining an environment of multilateral agencies expanded exceeded the 0.70 percent target. growth. the share of program lending and The share of non-OECD coun- other fast disbursing aid. Thus, tries in total ODA increased dur- External finance in the 1970s between 1973 and 1975 Official ing the 1970s but it reached its Development Assistance received peak (33 percent of the total) in When the developing countries' by the low-income countries had 1975. Most of this came from the trade deficits rose sharply after increased by 60 percent in real capital-surplus oil exporters. As 1973, the international community terms. Middle-income oil import- oil surpluses declined, OPEC's responded with great urgency, ers financed their enlarged deficits share in total ODA also fell, to 18 50 percent, in 1979, but rose to 20 per- developing countries, mainly ment increased sharply in the cent in 1980. Capital-surplus oil from Europe and from the Gulf early 1970s, responding to the exporters are now contributing 3.1 countries, rose from about $3.5 commodity boom and to more percent of their GNP for aid. Aid billion in 1970 to $24 billion in favorable policies toward foreign from the nonmarket industrial 1980$2 billion more than the investment in many middle- economies is negligible, 0.12 per- developing countries' total ODA income countries. But the spurt cent of their GNP. receipts, and equivalent to about was short-lived; after 1975 foreign The direct effect of rising oil rev- 13 percent of the major recipient equity investment did not even enues on the exports of the economies' merchandise exports, keep up with inflation. However, developing countries was small, and for some, much more (see with the expansion of commercial but some developing countries, box). bank lending, the form of foreign most of them among the poorest, Direct foreign investment, investment in developing coun- benefited from the oil exporters' which constituted about 20 per- tries itself changed. Intracom- increased economic prosperity cent of the net capital flows to pany loans supplemented equity through the export of labor and developing countries in 1970, has participation. The financing needs the corresponding inflow of remit- grown less rapidly than other of transnational companies were tances. Total remittances to the forms of external capital. Invest- covered increasingly from sources Workers' remittances Remittances from their nationals working mainly from other Arab countries (Egypt, frequently attributed to recession and the abroad yielded about $24 billion to the Jordan, Syria, the Yemen Arab Republic difficulties of 1973-75, the timing of the developing countries in 1980. Migrant and the People's Democratic Republic of beginning of these restrictions shows that workers have been mostly concentrated Yemen) and from South Asia (India, they preceded the oil price rise. On the in Europe and more recently in the Per- Pakistan and Bangladesh) although other hand, there has been a process of Sian Gulf area. Major beneficiaries among increasing numbers have come from East "maturing" of the migrant population. developing countries of remittances from Asia. Despite original intentions to import Europe have been Yugoslavia, Turkey, The level of remittances is closely labor only, even the countries with the Portugal and Morocco. Migrant laborers related to the number of migrant workers strictest immigration laws found that employed in the Gulf states have come abroad and their wages, as has been migration had taken on a circulatory observed in countries such as Greece, character some workers returned, many Yugoslavia and Turkey. In the case of the had acquired permanency status and the countries supplying labor to the Gulf age-sex composition of the migrant popu- states, migrant workers seem to remit lation was beginning to approach normal more the lower their occupational level. profiles. Remittance inflows to major Even though the propensity of unskilled The Middle Eastern countries are going labor-exporting countries, 1978 workers to remit usually remains high through a similar experience. The prob- Remittances because they do not often take their lem is more acute in this region; in no as a families to the country of employment, it other country is the proportion of for- Amount percentage of (millions merchandise tends to fall over time as the basic needs of eigners in the labor force as large. Nev- Country of dollars) exports their families are met and their own local ertheless, the outlook for increasing the expenses increase. volume of migrant labor in the Middle Yugoslavia 2,938.0 51.8 Turkey 1,011.6 44.5 Some labor-exporting countries have East in the near future may be slightly Portugal 1,688.9 60.5 had special schemes to attract remittances better than in Europe because the Morocco 762.5 51.3 from their workers abroad. But recent economies of the labor importers in this 88.8 research shows that such incentive region are crucially dependent on mi- Egypt 1,761.6 Bangladesh 115.1 21.0 schemes do not appear to have any sig- grant labor, and because Iraq and Saudi India 1,238.6 17.8 nificant impact on total remittances Arabia have not yet reached the same Pakistan 1,303.3 92.9 although they may lead to some realloca- relative levels of nonnational populations Jordan 520.2 175.4 tion of savings. as Kuwait and the Gulf states. In the * Yemen, PDR 257.7 The experience of Europe has demon- longer term, however, the prospects for Yemen, AR 1,277.0 strated that there is a limit to the number increased employment of migrant labor Upper Volta 65.9 59.6 of foreign workers that a society will wish do not appear bright in this region either. Mali 31.1 33.0 to allow. Many countries have put severe Therefore, unless new "poles" of immi- 'In these countries, remittance inflows restrictions on foreign labor and have gration develop, labor exporters are likely are almost the only source of foreign attempted to "stabilize" their migrant to find that remittance flows will not grow exchange earnings. labor force. Although these measures are at the same rates as in the past. 51 other than the parent company, such as borrowing from local Variable interest rate debt banks or the Eurocurrency In recent years, the bulk of credits ob- borrowers have benefited from negative market. tained from commercial banks have been real interest rates. But in a period of rising Private commercial bank lend- at variable interest rates. At end-1979 the inflation lenders have been better pro- ing was the component of external 33 largest developing-country borrowers tected against unanticipated inflation held a total variable interest rate (VIR) with VIR debt than with fixed-rate debt; finance that grew most rapidly, debt of around $180 billion including as the VIR share in total debt has from about $4.0 billion in 1970 to short-term debt. For each percentage increased, so has the borrowers' "wind- $36.1 billion in 1980. By the end of point increase in the base rate (usually fall" been eroded. This erosion seems 1980 the outstanding debt of the LIBOR) these 33 countries face extra likely to continue, and not just because developing countries to private interest charges of about $1.8 billion a VIR debt is becoming more common. In year. 1979-81 in contrast to 1974-78, real inter- sources of market capital had est rates have nearly always been positive; reached $284 billion, up from $32 with tight monetary policies, it is unlikely billion in 1970. Most of this that real rates could be negative for any increase came in the form of syn- Inflation and interest rates, length of time. dicated bank loans with floating 1972-80 Rising interest rates have also increased earnings on official foreign-exchange interest rates. The system of float- Percentage reserves and other foreign assets. The 33 ing rates-expressed as a margin 15 major borrowers held identified external above the London Interbank 6-month VIR assets of $115.3 billion at the end of Offered Rate (LIBOR)-enabled 10 LIBOR 1979, about two-thirds of total VIR debt the banks to offer longer matur- (see table). For a few oil importers (Spain and Colombia, for instance) VIR assets ities without exposing themselves exceeded VIR liabilities, making these to the risks of changes in short- countries net beneficiaries of increases in term rates of interest (see box). In money-market rates. For Argentina and contrast, borrowing in the bond 0 some other semi-industrial countries, market did not expand. Only in 1972 74 76 78 80 VIR debt and assets were about the same. But there are major borrowers with VIR 1977 and 1978 did the oil importers debt substantially in excess of VIR assets. borrow a significant amount At end-1979, Brazil had $10 billion of VIR through bond issues. Since 1977 assets and $39 billion of VIR debt; during most new bond issues by develop- The LIBOR has been volatile during the 1980, the gap widened. Other countries in ing countries have been in the past eight years. For most of that period, it a similar position included South Korea, has been below the rate of inflation in the Turkey, Chile, Ivory Coast, Morocco and form of floating-rate notes, which major industrial countries (see figure), so the Philippines. are financially very similar to syn- dicated loans from the viewpoint of both lenders and borrowers. Variable interest rate debt position at end-1979 Commercial bank lending to the (billions of dollars) developing countries was con- Total variable interest rate Foreign exchange centrated almost totally in the debt assets middle-income countries; the low- Major borrowers (33) from income oil importers did not bor- financial markets 181.3 115.3 row more than $630 million (net) Oil On porters 111.6 77.7 from the private banks in any year. Semi-industrial countries 92.9 65.0 Among the middle-income coun- of which: Argentina 9.6 8.9 tries the largest borrowers were oil Brazil 39.0 10.2 Chile 4.1 2.2 exporters (Mexico, Venezuela and Korea 9.9 5.6 Algeria) and upper middle- Spain 11.5 23.3 income countries (Brazil, Spain, Turkey 4.2 0.8 Argentina, Yugoslavia and South Other countries 18.7 12.7 of which: Colombia 2.8 3.8 Korea). These eight countries Ivory Coast 1.5 .2 accounted for 60 percent of total Morocco 2.4 .8 bank debt outstanding in 1979. Philippines 5.4 3.7 These changes in the pattern of Oil exporters 69.7 37.6 finance affected the low- and mid- of which: Mexico 29.6 8.0 dle-income oil importers in dif- 52 countries have therefore become Figure 5.3 External finance to much more dependent on com- Figure 5.4 Global current account developing countries, 1970, 1975 balances, 1972-80 mercial loans (mostly private bank and 1978 loans) and relatively less on ODA Billions of 1978 dollars 100 Trends and direct foreign investment Capital-surplus oil exporters pius lndaslrial Billions 1978 dollars 75 100 - (Figure 5.3). industrial countries' counlries surplus 70 - Middle-income oil imporlers In contrast, net capital receipts 50 50 - of the low-income oil importers 30 - did not increase at all after 1975 in 25 Capital-surplus oil exporters Low-income real terms. Real ODA receipts in 0 oil importers 1978 and 1980 were, in fact, lower Oil.importing developing than the level reached in 1975. 25 - countries There was no increase in the flow 50 Oil-expOrting -, All developing of commercial loans either. Thus, developing countries' countries surplus poor countries have received no 1972 73 74 75 76 77 I 78 79 80 additional support from the inter- Il I I I I I I I national community to deal with 1970 72 74 76 78 80 their terms-of-trade losses in Composition 1979-80, when relatively modest increases in aid would have re- billion. This was followed by a nar- OiJ importers Oil exporters Low- Middle-' duced strains on these economies rowing of deficits and surpluses income income Percent 1Tolals (billions of 1978 dollars)-1 and on more than 1 billion people during 1975-78. The second oil shares 3.0 8.5 8.8 16.6 33.3 51.3 7.2 22.6 24.7 living in these countries (exclud- price increase (1979-80) again 100 - ing China). widened the deficits and the 90 - Commercial loans surpluses. 80- of which: These trends, corrected for Privale 70 - Financial adjustment inflation in Figure 5.4, summarize 60 - Hf-- the broad contours of financial 50 - -lii Until 1973-74 the bulk of external adjustment that took place during 40 - 30 - II -Official UWorkers' remillances finance going to the developing countries came from the savings the 1970s. The major parties to the financial adjustment were the 20 - ii III of the industrial market econo- capital-surplus oil exporters and 10 - 0 1970 75 78 I iii 707578 707578 mies: the first group ran a current account deficit, the second a cur- rent surplus. Since the 1973-74 oil the middle-income oil importers. The shares of the low-income oil importers and the nonmarket Note: External finance defined as net capital inflows plus price increase, however, the oil countries in the net financial workers remittances. exporters have provided savings transfers were small. Even though that have been recycled to both the cost of oil-price increases on ferent ways. The middle-income developing and industrial coun- the industrial countries' external group's receipts increased rapidly tries. payments was large, these coun- in 1970-80not just those of net After the first oil-price increase, tries adjusted their external commercial credit and private the current account surplus of all balances, largely through rising investments but even of ODA. oil exporters rose from $4.1 billion exports to the oil exporters and Only in the case of workers' remit- in 1973 to $62.6 billion in 1974. The contraction of imports. Indeed, tances did the low-income coun- mirror image of this was reflected by 1975only a year after the first tries' receipts grow more rapidly. in the deficits of all oil importers, major oil-price risethe current This reflected the leveling-off of both industrial and developing accounts of the industrial coun- remittances from Europe, which countries, in almost equal shares. tries had shifted into surplus by accrued mostly to the middle- Current accounts of the industrial an amount roughly equal to the income countries, and the sharp countries shifted from a surplus of reduction in the surplus of all increase in remittances from the $18.9 billion to a deficit of $8.5 oil exporters. Middle East, where workers were billion while the deficits of the oil- Although the trade and capital imported mainly from low- importing developing countries flows among the major groups of income countries. Middle-income rose from $7.3 billion to $33.1 countries are the results of inter- 53 dependent developments, trends since deficit implies resource However, as discussed in Chap- during the 1970s suggest a pattern transfer. The optimum level of ters 3 and 6, the path and of causality running from the resource inflow to a country speed of adjustment varies among actions of the major oil exporters depends on the expected benefits countries, depending on their eco- to the balance of payments of the from the additional resources and nomic structure and policies. oil importers through the policies their costs. Normally the benefits Middle-income oil importers, es- of the industrial countries. The would relate to the rates of return pecially the more industrialized price of oil set by major oil export- on the assets created with the ones that pursue outward-ori- ers, within the constraints of the imported resources and the costs ented policies, can reduce their market, has a direct impact on the would depend on interest rates dependence on foreign finance economies of the oil importers. and the difficulty of managing faster than can the less indus- The oil exporters also decide the repayment schedules of borrowed trialized or the inward-oriented. use to which they will put their resources. In times of sharp exter- On the other hand, low-income revenues. Because of the nature of nal shocks arising from terms-of- countries, especially the least their imports, the positive impact trade deterioration or export developed and primary pro- of oil revenues on trade flows has shortfalls (as happened in 1973-75 ducers, have more limited choices been felt mostly by the exports of and 1979-80), the utility of exter- even in the medium term. the industrial countries. Oil nal resources goes up because Although economic policies in exporters used 44 percent of their they allow the economy time to many of those leave much to be earnings on imports from indus- adjust to the new circumstan- desired, their exports will take trial countries and only 8 percent cesby substitution in pro- longer to respond to improved on imports from oil-importing duction (between energy and policies. Neither do they have developing countries. The finan- other inputs) and consumption much scope for import substitu- cial investments by the oil export- (between traded and nontraded tion. These are also the countries ers have also gone mostly to the goods). which cannot borrow from private industrial countries. It takes time for production pro- capital markets and will remain Therefore, although higher oil cesses to be restructured, for labor dependent on concessional assis- prices had a direct impact on the and capital to move and for con- tance. import bills of the oil importers, sumption habits to be changed. their effect on these countries' Consequently, the induced de- Prospects exports depended on the expan- cline in real income and the sion of markets in the industrial increase in the exchange rate will In the absence of new external countries. The first oil-price rise be larger in the first period follow- shocks, external capital require- occurred at a time of worldwide ing an external shock than in suc- ments of the oil importers as a demand pressures and booming cessive periods. These differential group are likely to decline as a commodity markets; and the effects provide a rationale for ratio to their GNP from the high industrial countries, faced with external borrowing to contribute level reached in 1980 (4.9 percent). rising rates of inflation, responded to structural adjustment. Borrow- But the decline will be gradual, with deflationary policies. Thus, ing transfers income to the period and current account deficits are rising import demand, induced by when real income has experi- likely to remain high compared to the oil exporters' surpluses, was enced the strongest decline and historical averages. These high not transmitted to the oil import- increases the supply of foreign levels will reflect the difficulties ers, and immediate trade adjust- exchange in the period when it is of adjustment faced by the oil ment was insignificant. In the most scarce. To the extent that a importers (especially the poorer wake of the most recent oil-price developing country cannot get countries), higher interest pay- increase (1979-80), the downward external capital, it has to cut ments which have reduced the synchronization of economic expenditure immediately, before proportion of net resource trans- activity in the industrial countries production or consumption re- fers, and the continuing has been less marked, and the sponses have had time to operate. though smalldeterioration in indirect effect on exports of the In the longer term, however, their terms of trade. developing countries is slightly trade adjustment becomes a The funds to finance the deficits more favorable than in 1974-75. necessity, not least because the of the oil importers will come There is nothing inherently ability to supply external capital from persistent surpluses of the undesirable about external deficits depends on export prospects. oil exporters, augmented (or 54 reduced) by the surpluses (or defi- be greatly assisted by more official capital constraints of the World cits) of the industrial countries. lending. Bank and therefore additional But at what levels these transfers Despite these considerable ben- finance will have to be raised. can actually take place will depend efits, nonconcessional official The IMF has increased its fund- on the policies of the donor coun- finance is not increasing enough ing for balance of payments pur- tries as far as concessional finance to fulfill its potential. The share of poses and is taking major steps to is concerned, and as regards mar- official lending in total nonconces- expand further its facilities for ket transfers, on the borrowing sional finance was about one adjustment lending. The potential capacities of the developing coun- fourth in 1970 but had fallen to 18 access of developing countries to tries and the efficiency of financial percent by 1980. Contributions to all IMF facilities has risen after intermediaries. the multilateral development the seventh general quota increase banks are either being scaled and the adoption of new guide- down or delayed; even if all lines on the access of the member Official finance prospective capital increases and countries to IMF facilities. To The low-income countries can subscriptions were immediately increase its resources, the IMF has borrow very little commercially. available, more funds would be initiated the eighth quota review. They will continue to depend needed to provide adjustment But as the review will take time, heavily on official (and mainly assistance while maintaining proj- the IMF is supplementing its concessional) lending for financ- ect lending. liquidity by borrowing. Addi- ing their development and struc- A new type of lending launched tional funds will be negotiated tural adjustment. Noncommercial by the World Bank, structural with member countries. If larger official finance is important espe- adjustment lending (SAL), will amounts are needed, these will be cially for the debt management help oil importers adjust to the funded by central banks, and pri- of the middle-income countries. changing international environ- vate capital markets may also be ment. SAL will assist countries in tapped. The IMF is also consider- NONCONCESSIONAL FINANCE. formulating and carrying out ing new allocations of Special The variable interest rates and structural adjustment programs Drawing Rights (SDRs) as interna- shorter maturities of private com- and will provide finance during tional reserves that will help to mercial loans have increased the the adjustment period. Structural lighten the developing countries' developing countries' debt-ser- adjustment loans are planned as a burden of maintaining adequate vice burden and have added new series of three to four operations levels of reserves. uncertainties about the future over a five- or six-year period. level of interest rates and refinanc- Clearly, if essential World Bank AID. The level and outlook for ing possibilities. Moreover, in a project lending is not to be Official Development Assist- period of inflation, variable reduced, additional funding will ance1 is cause for serious concern interest rates contain an element be necessary. to the low-income countries. of compensation for the erosion of Additional funding will also be Some donor countries have taken capital values and have the effect needed for another major effort of reducing maturities, thereby planned by the World Bank, the 1. The data on Official Development Assist- ance in Figure 5.5 and Table 16 of the World adding to the cash-flow diffi- expansion of lending for energy Development Indicators Annex are not culties of borrowers. production in the oil-importing comparable with the ODA data in Tables Under these circumstances, countries. The World Bank has 2.4, 5.1 and 5.4 and in Figures 5.2 and 5.3. The former are based on the OECD credit-market sensitivity to already increased its emphasis on Development Assistance Committee prospective debt burdens influ- lending for energy so that it (DAC) definitions which show disburse- ences the possibilities of rolling accounts for about 17 percent of ments of all types by donor countries. the Bank's program for 1982-86. Tables 2.4, 5.1 and 5.4 and Figures 5.2 and over or refinancing existing debt 5.3 show grants and concessional loans on maturity. These concerns will The $14-billion program envis- received by the developing countries as be eased the more countries bor- aged is, however, no more than reflected in their balance of payments. The one-half of what is regarded as principal differences are that the DAC row on lower and more stable definitions cover technical assistance and interest rates and longer matu- feasible and desirable. An addi- contributions to multilateral institutions, rities. Since they have been able to tional program of energy invest- including paid-in capital. The data on ODA receipts generally exclude these two, borrow very little of this kind of ments has been identified totaling and in the case of the multilateral institu- finance from private markets, a further $16 billion. This cannot tions include only the disbursement of middle-income countries would be carried out within the present concessional loans. 55 the position that economic and developing worldall these attest Altogether, out of total bilateral aid budgetary difficulties are adding to the value of aid. of $17 billion in 1979, $11 billion new limits to their ODA pro- In today's circumstances, aid went to middle-income countries. grams. In the United States, makes another, no less valuable, The economic and humanitarian which is already one of the contribution. It is needed to help merits of a reallocation to the smallest donors in terms of the poor countries adjust to the losses poorer countries are obvious, but proportion of its GNP, new budget that they have suffered or will political considerations have so far proposals indicate that future aid suffer as a result of deteriorating precluded such action. will be lower than had seemed terms of trade. Most low-income probable a year ago. The United countries have had to forgo Kingdom has announced cuts in growth to restrict their balance of previously planned programs. payments deficits. In the future, Fortunately, however, the Arab they will need more concessional OPEC countries and the Scan- assistance than they seem likely to Figure 5.5 Sources and dinavian countries have main- get if they are to carry out the distribution of aid tained high ratios of ODA to GNP, adjustment process at growth ODA flows from major donor groups. 1970, 1975 and 1979 and Japan, the Federal Republic of levels even as high as the inade- Total ODA Germany, France, Canada, Italy quate rates of the 1960s and 1970s. (billions of 1878 dollars) Percentage and Switzerland have all indicated Reallocating concessional aid share that they hope to increase their aid from middle-income to low- 100 - 13.6 6. 26.6 6.3 17.6 - Nonmarket Countries efforts. income countries is almost as 90 86.4 - OPEC Aid has been criticized for not important as increasing its overall 80 76.1 promoting growth or for not amount. In 1979 low-income coun- 70 66.7 reaching poor people. Critics have tries (excluding China)whose 60 argued that in some countries, share of the developing countries' 50 - especially in Africa, extra aid population was 55 percent 40 - - DAC could not be translated into pro- received only 37 percent of ODA 30 - ductive investment. But most crit- given by OECD and OPEC coun- 20 - icism of aid lacks a basis in fact or tries. Their receipts per person 10 - experience. There are countries ($6.80) were less than half of those 0 that lack skilled personnel or of the middle-income countries. If 1970 1975 1979 whose administrative organiza- aid through the multilateral Distribution of aid, 1979 tion is weak. Even here, however, institutions is excluded, only 32 (percentage share) there is much to be done by aid percent of bilateral aid went to the Uealloeated by country coordination, by improving the low-income countries ($11.80 per quality of aid and by using aid for person to middle-income coun- removing these very limitations. tries and $4.70 to low-income Aid finances only a small propor- countries). tion of investment in develop- Aid to the middle-income coun- ing countries; but aiding well- tries from three major sources is conceived and well-monitored heavily biased toward three programs makes a difference to groups of countries. Israel and the overall development effort. Egypt, together, received about The fact that Indiaonce forecast $2.5 billion in 1979 (mostly from to be famine's permanent home the United States). This amounted has become to a considerable to $58 per person and equaled 7.2 Distribution of bilateral aid to middle-income countries degree self-sufficient in food- percent of their GNP and about 22 (percentage) grains is due to aid and technical percent of their imports. In a simi- From From From assistance combined with major lar way, OPEC aid is heavily con- Coccntry DAC OPEC DAC & OPEC efforts on the part of India itself. centrated on the contributions to Egypt Israel Jordan 12 14 1 -29 1 9 10 8 Family planning in Indonesia, Jordan and Syria, and a large por- Syria 1 42 12 French dependencies 16 new cereal varieties in East Africa tion of French aid goes to its Over- Sub-total 44 72 51 and railways, roads, dams and seas Territories in the form of Others Total 56 100 28 100 49 100 power plants throughout the technical assistance (Figure 5.5). 56 Multilateral ODA partly offsets Table 5.2 Medium- and long-term external debt, the bias of bilateral aid against outstanding and disbursed, 1970-80 low-income countries. Principal Billions of Billions of sources of multilateral ODA are current dollars 1978 dollars Percentage real growth, the United Nations, the European Country group 1970 1980 1970 1980 1970-80' Economic Community and the Oil importers 48.0 301.3 102.6 250.9 9.4 International Development Low-income 14.5 48.0 31.0 40.0 2.6 Association, the latter disbursing Middle-income 33.5 253.3 71.6 210.9 11.4 about 84 percent of its aid to low- Oil exporters 19.7 137.4 42.1 114.4 105 income countries. All developing Private lending countries 67.7 438.7 144.7 365.3 9.7 The growing importance of pri- Note: Includes private nonguaranteed debt. vate bank lending, particularly for a. Compound annual rate of change. the middle-income countries, has been the outstanding feature of development finance during the changes in the composition of sources; a marginal increase in the past decade. Whether that growth debt have increased the burden of share coming from multilateral will be maintained depends es- servicing it. institutions; and a large increase sentially on two factors: the bor- Over the past decade, there has in the proportion of loans from rowers' willingness and ability to been a sharp fall in the share of net private creditors-especially from service more debt, and the banks' borrowing from bilateral official financial institutions. As a result, willingness and ability to expand debt to private creditors increased their role as intermediaries. These at 28 percent a year, debt to finan- two issues are discussed in turn. cial institutions at 41 percent a Figure 5.6 Developing countries' outstanding debt, by type of year. Private financial institutions DEBT. Between 1970 and 1980, creditor, 1970 and 1980 held 12 percent of outstanding pri- developing countries' outstand- (percentage shares) vate and publicly guaranteed debt ing medium- and long-term debt All developing countries in 1970 and some 43 percent in increased more than sixfold in Official Total outstanding 1980. nominal terms (at an average Private (biltions of current dollars) These changes were largely the Bilateral Multilateral annual rate of 20.5 percent), reach- product of what was happen- ing $438.7 billion by the end of 1970 ing to the middle-income coun- // 1980, compared with only $67.7 tries. The share of official creditors billion as recently as 1970 (Figure in the debt of the middle-income 5.6). The low-income oil import- oil importers fell from 43 percent ers' debt grew less rapidly, since 1980 in 1970 to 27 percent in 1980 while they depended more on grants. private creditors accounted for The single most important factor almost three-quarters of the total in these increases was the rapid by 1980. By contrast, the composi- rate of inflation. In real terms out- Low-income oil importers tion of the low-income oil im- standing debt grew at around 10 Total porters' debt changed very little. percent a year, compared with Official outstanding (billions of They continued to borrow mainly about 12 percent a year during the Bilateral Multilateral Private Current dollars) from traditional sources-bi- 1960s (Table 5.2). 1970 14.5 lateral lenders and multilateral The growth of debt was not institutions. excessive in relation to GNP or exports (see box, overleaf). The debt to GNP ratio increased over the 1970s, as would be expected; 1980 / 48.0 The growth of borrowing from private banks together with the rise in interest rates has increased the burden of servicing debt. Part but measured against exports of of the rise in interest rates is an goods and services, the debt ratio inflation premium. But even infla- I I I I I I I was lower in 1980 than it had been 0 20 40 60 80 100 tion-corrected interest rates have, in 1970. However, significant in recent years, been higher than 57 Debt indicators There are two broad categories of debt Those that measure a country's debt-service and the capital-service ratios indicators: capacity to generate real resources (which increase more sharply during the 1970s Those that measure a country's can then be used to pay for imports and (see figure), reflecting the high and rising capacity for making payments in foreign service debt). The ratio of interest payments debt of those countries that are currently exchange. The most widely used of these to GNP is often used to illustrate the debt- the major borrowers. is the debt-service ratio-interest and prin- service burden on an economy's produc- cipal payments on long-term debt tive capacity. divided by exports of goods and services. Some indicators-the ratio of external Its meaning can seldom be easily inter- debt to foreign exchange reserves, for preted: some countries have had little example-combine features of both types Developing countries' debt-service difficulty in managing their debt with a of measure. But none of them are an ade- and capital-service ratios, 1970-79 ratio of 40 percent or more, while others quate substitute for detailed country i'crcci,tQgC have had severe problems when debt- analysis. In a period (like the 1970s) when 30 service payments were less than 10 per- debt is substituting for equity capital, a Capital-service ratio cent of exports. country's capital-service ratio-contractual 25 - Debt-service ratio The apparent paradox is explained service payments on long-term debt, plus remitted profits on direct investment Weighted by shares partly by how easily countries can borrow in public debt commercially. As long as investors have divided by exports of goods and ser- confidence in the management of an vices-may be the best guide to a coun- 15 economy, they will roll over principal try's creditworthiness. repayments. In such circumstances, the As the table shows, the various mea- 10 interest-service ratio-interest payments sures have not always moved in line with divided by exports of goods and ser- each other, although all indicate a clear Unsvrightrd vices-may be a better indicator of the deterioration since 1974. Weighted by country's ability to make payments individual countries' shares in total public abroad, since it avoids the distorting debt (so that the effect of countries with 0 effects caused by a bunching of repay- growing exports but low indebtedness on 1970 71 72 73 74 75 76 77 78 79 ments, prepayments, or refinancing. the average ratios is minimized) both the Developing countries' outstanding debt, 1970-79 (percentages) 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 Indicators Debt-service ratio 8.9 9.2 9.0 8.8 7.1 8.4 8.4 9.5 12.4 12.6 Interest-service ratio 2.8 2.9 2.8 2.7 2.4 3.2 3.3 3.5 4.2 4.8 Capital-service ratio' 14.5 14.5 13.4 13.4 11.1 11.9 11.5 12.9 15.5 15.0 Debt/GNP (percentage)b 12.3 13.1 13.5 13.1 12.6 13.9 15.5 17.0 18.3 17.8 Debt/exports (percentage)b 80.1 85.2 81.8 70.0 59.6 72.1 75.6 79.6 86.6 78.3 Debt/reserves (percentage)b 263.7 239.9 183.2 153.9 143.5 193.9 204.6 214.5 217.3 176.4 Interest-service/GNP (percentage)b 0.4 0.4 0.5 0.5 0.5 0.6 0.7 0.7 0.9 1.1 Memo item Total public debt outstanding and disbursed, all included countries (billions of dollars) 50.4 59.3 69.3 84.8 105.5 128.4 159.1 198.9 251.7 294.4 Note: Includes all developing countries that report to the World Bank's debt-reporting system except: (1) the capital-surplus oil exporters; and (2) countries for which complete and reliable time series data are not available (Afghanistan, Bahrain, Botswana, Burundi, Comoros, Guinea, Iran, Iraq, Lebanon, Lesotho, Liberia, Maldives, Nepal, Papua New Guinea, and South Africa). Contractual service payments on long-term debt, plus remitted profits on direct investment divided by exports of goods and services. Debt outstanding and disbursed. in the early 1970s and 1960s. it aggravates the debt-servicing (9 years) sources remained prac- Moreover, while the inflation pre- problems of developing countries. tically the same over the period. mium compensates for the ero- Average maturities fell from 20 Thus, the grant element in sion in the real value of outstand- years in 1970 to 12.7 years in 1980, developing countries' debt fell ing debt, when combined with the although the maturities of loans from 31.8 percent in 1970 to 6.3 shortening of average maturities from official (24 years) and private percent in 1979, with the share of 58 concessional debt in the total fall- cent in 1975-76, butpartly as a tries have spent an increasing pro- ing from 39 percent in 1970 to 23.6 result of refinancing of debtit portion of their export earnings on percent in 1979. had fallen to 40 percent by 1978. A debt amortization and interest Higher interest rates and short- slowdown in borrowing com- payments, particularly toward the er maturities meant that the bined with the surge in interest end of the decade (see box). growth in gross borrowing be- rates caused the ratio to fall to only Part of the recent deterioration tween 1970 and 1980 was not trans- 22 percent in 1980. was caused by large-scale refi- lated into comparable growth in nancing in 1978 when the major net transfers. In 1970, after amor- BORROWING CAPACITY. One borrowers took advantage of tization and interest payments, indication of a borrower's capacity favorable market conditions. That some 43 percent of borrowed to service its debt comes from a reflects good debt management, funds was available for buying comparison of debt-service pay- not a worrisome upward trend. imports and adding to reserves. ments with export receipts. By But the interest burden also rose That share rose to nearly 50 per- this measure, developing coun- significantly: measured in relation Debt relief While most developing countries have officially guaranteed debt (loans from restructured in 1970), Ghana (1974) and been able to meet principal and interest governments and insured commercial Pakistan (1974 and 1981). Generally, debt payments on their external debt, some credits) has been arranged through the relief has not been extended on pre- have been forced to seek debt relief. The Paris Clubad hoc meetings of represen- viously rescheduled debt. circumstances leading to debt renegotia- tatives of the governments of creditor The Paris Club arrangements for debt tions have varied, but most had some countries. In contrast with consortium relief provide for an orderly restructuring similar basic features. These included meetings, the Paris Club has discussed of external obligations when debtor coun- balance-of-payments deterioration and only debt relief and not overall flows of tries have serious liquidity problems. But excessively expansionary fiscal and foreign aid. there has been continuing disagreement monetary policies over several years During the 1970s, loans from commer- between debtor and creditor countries which were aggravated by short-term cial banks have expanded rapidly, and over the length of the consolidation shocksthat is, shortfalls in exports or debt relief has increasingly involved period and the terms of repayment, workers' remittances, sharp worsening of commercial banks. The restructuring of reflecting different points of view regard- terms of trade and national calamities. commercial banking debts has taken ing the purpose of debt relief. Most credi- Some steps countries took to cope with place in parallel with Paris Club agree- tor countries' position is that the objective these difficulties added to their problems. ments for Peru (1978), Sudan (1980), of debt relief is to help debtor countries They borrowed at hardened terms. Pri- Turkey (1979) and Zaire (1980). In addi- recommence meeting their debt-service vate credit also sometimes had a tion, there have been substantial refi- payments as scheduled and so restore destabilizing effect. For example, banks nancings of debt to commercial banks their creditworthiness. Thus, a short con- would lend when commodity prices were without Paris Club involvement: Argen- solidation period is considered appro- rising but would cut back when export tina (1976), Jamaica (1979), Nicaragua priate so that debt relief can be adjusted earnings declined. (1980) and the Philippines (1970). Debt to correspond to the country's changing Debt relief has been arranged for a few restructuring agreements with commer- capacity to repay. The debtor countries countries through aid consortia; large cial banks since 1973 amount to $5.1 point out that when debt difficulties are sums have been involved and different billion of which Turkey accounts for $3.1 deep-seated, short consolidation periods aims pursued. Pakistan's public debt of billion. compel them to seek continuing debt $990 million was rescheduled in a series of Debt relief has been extended gen- relief and short repayment periods lead to agreements negotiated in aid consortia erally for periods of 12 to 18 months a future bunching of debt-service obliga- meetings from 1972 to 1974, and in 1981. on the condition that the debtor adopts tions. They insist that debt renegotiations India received $1.25 billion of debt relief a stabilization program (usually one should take into account their future between 1968 and 1976 (along with aid approved of by the IMF or a stand-by adjustment problems and financing pledges and without interruptions to ser- agreement) to eliminate balance of pay- needs and that concern about credit- vice payments) from the Aid Consortium, ments difficulties. Repayment of re- worthiness should take a longer-term mainly to improve the quality of aid at a scheduled debts is normally over 7 to 10 view. time when debt-service payments were years, including 3 to 4 years' grace. The best way for the international com- constraining India's access to free foreign Interest charges on rescheduled debts are munity to assist countries with large debt exchange resources. Turkey received typically set at the rate for new loans of and poor export prospects remains massive debt relief through the OEEC in the type being rescheduled. Debt relief unresolved, but increasingly emphasis 1959 along with general economic assis- on concessional terms (low interest rates falls on the need for debt relief as part of a tance. plus long repayment) has been extended viable package of foreign financing to For 13 other developing countries over only to India (noted above), Indonesia support an economic program. the past 25 years, debt relief on official or (where the entire outstanding debt was 59 to developing countries' GNP, improved significantly between Creditworthiness of individ- interest payments more than 1970 and 1979, that was due ual countries will depend essen- quadrupled between 1970 and entirely to India's weight in the tially on their growth and export 1980, from 0.4 percent to 1.8 per- average; its exports and GNP grew performance and on the structure cent of GNP. enough to raise its credit standing of their debt. Commercial banks Debt-service ratios weighted by in commercial markets. Some are unlikely to seek expansion of the debt of individual borrowers other low-income countries could their lending to countries with have risen even more sharply also become borrowers of com- poor export prospects. On the than the unweighted ratios, indi- mercial credit on a small scale, but other hand, countries such as cating a more serious deterio- they will remain largely depen- Brazil, Mexico and South Korea ration for the current borrowers dent on official aid. have shown that heavy borrowing with the largest debt. Looking just Middle-income oil importers. can be serviced provided that the at the principal borrowers, three- They saw their debt burden in- economy grows rapidly and ex- quarters of them had higher debt- crease steadily during the 1970s, ports are buoyant. South Korea's service ratios in 1979 than they had a trend that was generally consis- debt rose from $1.8 billion in 1970 in 1970. In several cases, debt- tent with prudent borrowing and to $15 billion in 1979; yet its exports servicing difficulties were so their expanding economies. Dif- grew so rapidly (outstripping severe that countries had to seek ferences exist, however, among GNP growth) that its debt-servic- debt relief (see box). members of the group. Some are ing capacity improved consider- Another trend has reduced the in a much stronger position to ably over the decade. Mexico's debt-management capability of borrow now than in the mid- creditworthiness also improved as many developing countries in 1970s because of excellent export earnings from oil exports started recent years: the share of export- performance; in nearly every case, to rise. tied credits has risen, resulting in they are sizable exporters of Commercial banks will be wary a declining ratio of freely usable manufactures. Others run the risk of countries that have borrowed credits to total borrowings. Com- of encountering difficulties if they excessively from them or that are bined with a falling share of net attempt to expand their borrowing burdened with a disproportionate transfers (after amortization and as rapidly as in the past; nearly all volume of private debt on market interest), the flexibility acquired in of them are heavily dependent on terms and rather short maturities. foreign exchange management in commodity exports. As a group, Prudent borrowing policies, larg- the early 1970s will be much the middle-income oil importers er flows of official aid with longer reduced in the 1980s. account for nearly 58 percent of maturities and mechanisms for While these trends indicate that the total disbursed and outstand- resolving the liquidity problems of the developing countries will face ing debt of all developing coun- debtors through appropriate poli- more serious debt-management tries; their performance in the cies, refinancing and resched- difficulties in the future, they do 1980s will be a major influence on uling, will be needed to minimize not signal a generalized debt the overall growth of lending by disruptions. problem for the developing coun- private creditors to developing tries. Balance of payments projec- countries. BANKS AS INTERMEDIARJES.After tions for the 1980s under probable Oil exporters. Their borrow- the rapid expansion of the 1970s, scenarios support this view. The ing prospects look as promising as the growth in medium- and long- concern about the total debt of they did at the time of the 1973-74 term private bank lending to the developing countries that occu- oil-price increase. Despite their developing countries slowed con- pied regulators, financial com- heavy borrowing in the past, they siderably in 1980. This was accom- mentators and some bankers in are unlikely to run into debt- panied by a hardening of terms the late 1970s is likely to be management difficulties provided wider spreads, higher fees and replaced by a return to greater that they invest their borrowed shorter maturities. This lull has emphasis on individual credit- funds productively and develop strengthened concerns that the worthiness and differentiation of their nonoil exports. However, commercial banks may not play lending terms. these countries need to prepare the same role in recycling as they By country group, debt profiles their economies for the adjust- did in 1973-79. can be summarized as follows: ment they will face when their It can, however, be explained Low-income oil importers. oil reserves are exhausted (see partly by changes in short-term Although their debt indicators Chapter 6). conditions. The major borrowers 60 had borrowed heavily in 1978, tak- relative to domestic assets, result- increase their exposure. ing advantage of the low spreads ing in capital growth not keeping Summing up these various in- and the high liquidity of the banks pace with international asset fluences on commercial banks, it to prepay earlier loans contracted growth. Banks' gross claims on oil seems highly probable that both on wider spreads. Some of the importers rose from 49.6 percent borrowers and lenders will adapt subsequent decline in borrowing of total bank capital in 1975 to 61.5 to changing conditions without in 1980 can also be attributed to the percent in 1978 while claims on de- precipitating any general crisis of high short-term interest rates in veloping countries as a percentage confidence. While some econ- the United States and their impact of total assets rose from 2.6 per- omies may find it harder to service on the key Eurocurrency rate cent to 2.9 percent. For US banks, their debt, others will find it (LIBOR). And there were particu- the ratio of developing-country easier. Different countries are lar reasons why some individual loans to capital rose from 49.4 per- involved with different banks, countries did not borrow much cent (1975) to 57.7 percent (1978), and the degree of their involve- from the banks. It seems likely and the ratio of loans to total assets ment also varies. Loans rarely that the slowdown in lending was rose from 3.6 percent to 4.0 per- mature simultaneously. And no not as marked as it appeared on cent. However, since commercial developing country accounts for the surface. Data produced by the bank deposits of the developing more than 3 percent of total Bank for International Settlements countries have also increased, the international banking assets. (BIS) suggest large increases in rise in net exposure is much less. Developing-country risks are not short-term, unpublicized borrow- To what extent increased synchronized. ingwhich are not included in exposure will cause banks to slow Foreign private banks' relations statistics of publicized borrowings their lending to developing with the developing countries in capital markets. countries will depend on factors have become much more diver- Beyond these short-term fac- such as the return on developing- sified and complex in recent years, tors, are there any reasons why country loans, bankers' percep- going beyond the lender-bor- bank lending may not continue to tions of desired portfolio limits rower interaction. Deposits by the grow? Examination of individual and the effect of foreign asset developing countries, including a countries shows some deteriora- growth on the cost of raising new large proportion of their foreign tion in the borrowing capacity capital. There is little evidence to exchange reserves, reached $90 of certain developing countries suggest that foreign lending is less billion in 1979. Private banks also and a slight increase in the con- profitable than domestic lending; serve as correspondent banks, centration of debt over the decade. indeed, the reverse has probably operate local branches, finance However, given the profitability of been the case in the 1970s. Banks trade, advise governments, and lending to developing countries, have suffered less from defaults act as bankers to their corporate their exemplary record (with few on foreign loans than on their clients that have business interests exceptions) in meeting their domestic business. However, it is in the developing countries. These obligations and their continuing possible that bankers and their client relationships are likely to need for foreign finance, it seems shareholders have different views grow, in parallel with the increas- unlikely that financial intermedi- on the desirability of foreign lend- ing financial development of the aries will discriminate against ing, and this could weaken the more advanced of them; and the developing countries as a group. banks' ability to raise new capital. attractiveness of these oppor- They may, however, have to con- tunities will be an important factor sider two institutional constraints COUNTRY LIMITS. For pruden- in the growth of private banks' on their lending policies. tial reasons, banks impose inter- involvement in the developing nal limits on lending to individual countries. CAPITAL ADEQUACY. There is countries. These limits are not for- For these and other reasons, some justification for the claim mally defined or published, so banks that feel they are over- that banks' capital ratios have been there is no way of analyzing how exposed internationally can gen- declining since 1973, but the close banks are to these limits. erally be replaced by others as extent of this decline and its effect However, some banks are un- happened to some extent in the on lending to the developing doubtedly at or near their ceiling late 1970s. International lending countries are less clear. However, for some countries; those coun- by German, Swiss and Dutch a more relevant change has been tries will be able to borrow more banks accelerated in 1976-77 and the growth of international assets only if other banks are prepared to by Japanese banks in 1978-79 61 while the American banks were the share of oil-importing devel- from the need for the support that slowing down their foreign lend- oping countries has gone up to the international financial institu- ing. 20-30 percent. Thus, OPEC-Arab tions can provide. Because the More recently the OPEC-Arab banks now account for about 4.4 share of developing countries in banks have increased their par- percent of total international lend- the total assets of the private banks ticipations in syndicated Euro- ing and 4.3 percent of lending to is small, minor changes in the loans to the oil-importing devel- the oil-importing developing banks' perceptions may signifi- oping countries. An analysis of countries. Profitable lending cantly reduce the amount that a the lead management role of these opportunities in due course attract country can borrow. Changed atti- banks suggests an increase in their new capital into foreign lending tudes can then be self-fulfilling, share of international lending as and may even produce new insti- by precipitating debt-service diffi- well as a shift toward oil-import- tutions. culties for the borrowers. To re- ing developing countries. Whereas This confidence in the basic duce such risks and uncertainties about 80 percent of their lending adaptability of the capital markets and to improve the access of the went to oil exporters and Arab should not, however, distract developing countries to stable countries and only 10 percent to attention from the need for vig- flows of nonconcessional credit, the oil-importing developing ilance by borrowers and lenders direct placements by the oil ex- countries in 1977-78, in 1980-81 on the evolution of the markets or porters in developing countries Table 5.3 Oil importers: financing current deficits, 1970-90 (billions current dollars) Annual Annual percentage growth percentage growth Projections (current prices) (constant prices) 1985 1990 1980-90 2980-90 Item 1970 1980 High Low High Low 1970-80 High Low 1970-80 High Low Current accounts Resource gap -8.8 -65.2 -71.6 -58.0 -116.5 -83.0 22.2 6.0 2.4 11.2 -1.0 -4.3 Workers' remittances 2.3 16.7 25.7 23.8 36.8 33.5 21.9 8.2 7.2 11.0 1.2 0.2 Interest payments -1.4 -22.5 -41.9 -39.8 -65.6 -55.5 32.0 11.3 9.4 20.0 4.0 2.3 Other current transactions -0.7 1.5 1.7 2.3 4.0 3.7 Current account balance -8.6 -69.6 -86.1 -71.7 -141.3 -101.3 23.3 7.3 3.8 12.1 0.3 -3.0 Financed by Net capital flows 9.1 55.3 96.2 76.1 161.6 112.2 19.8 11.3 7.3 9.0 4.0 0.3 ODA: Grants 1.0 8.3 16.7 13.7 27.9 20.9 23.6 12.9 9.7 12.6 5.5 2.5 Concessional loans 2.1 8.0 16.2 13.5 26.4 20.6 14.3 12.7 9.9 4.1 5.3 2.6 Total 3.1 16.3 32.9 27.2 54.3 41.5 18.1 12.8 9.8 7.5 5.4 2.6 Medium- and long-term borrowing: Official export credits 0.5 2.6 3.6 3.6 6.7 5.5 17.9 9.9 7.8 7.2 2.4 0.4 Multilateral 0.5 3.2 6.3 5.5 9.0 8.1 20.4 10.9 9.7 9.4 3.5 2.3 Private 3.4 27.5 42.8 30.5 74.6 43.6 23.3 10.5 4.7 19.7 3.3 -2.1 Total 4.3 33.4 52.5 39.6 90.3 57.2 22.8 10.5 5.5 16.6 3.2 -1.4 Private direct investment 1.7 5.6 10.8 9.3 17.0 13.5 12.7 11.7 9.2 2.7 4.4 1.9 Change in reserves' and short-term borrowing 0.5 14.3 -10.1 -4.4 -20.3 -10.9 Memorandum items Debt outstanding (billions of dollars) 48.0 301.3 577.3 539.0 1,047.0 872.7 20.2 13.3 11.2 9.1 5.9 3.9 Resource gap/GNP (percentage) 2.5 4.6 2.7 2.3 2.5 2.0 Current account deficit/GNP (percentage) 2.4 4.9 3.3 2.9 3.0 2.4 Net capital flows/GNP (percentage) 2.6 3.9 3.6 3.1 3.4 2.7 Debt service/GNP (percentage) 1.2 3.9 3.8 3.8 3.8 3.7 Interest payments/GNP (percentage) 0.4 1.6 1.6 1.6 1.4 1.3 a. Estimate. b. Minus (-) equals increase. 62 should be encouraged, and the concessional aid without impos- financial conditions and policies international financial institu- ing a significant burden on their in the major industrial countries tions should play a larger role in citizens. Therefore, it is quite fea- will be an important factor on intermediationdirectly or in sible for capital flows to grow at a the supply side. On the demand cooperation with the private faster rate than is assumed in the side the feasibility of continued banks. High case. recycling will depend on the per- These projections are also mod- formance of the developing coun- TRENDS AND UNCERTAINTIES.TWO est in relation to the needs of the tries. Future trends of official scenarios of the developing coun- developing economies for capital capital flows are even more diffi- tries' adjustment and growth dur- and their ability to use it produc- cult to project since they will ing the next decade were dis- tively. Moreover, they are related basically reflect political decisions. cussed in Chapter 2. The High to expectations about trade and Most of these uncertainties can- and the Low case assumptions current account balances under not be eliminated. But official about capital flows are consistent the assumption of no abrupt actions can improve the climate with the views discussed above. changes in the external environ- in which developing countries ob- The growth of net capital flows to ment. Many countries could use tain private finance. Commercial the oil importers is projected to more resources productively if bank lending needs to be supple- slow down from the high rates of they were available on convenient mented by more official credits. the 1970s, but net capital will con- terms. On the other hand, less Additional ways of recycling the tinue to contribute resources favorable circumstances may also oil exporters' surpluses need to be equal to 2.7 to 3.6 percent of their call for higher levels of external developed and existing mecha- GNP (Table 5.3). This is lower than support (at concessional terms) to nisms strengthened. The institu- the levels reached in some years of sustain minimum development tional framework for debt refi- the last decade but higher than the efforts. nancing and rescheduling must be pre-1973 level. Needless to say, there are many improved so that liquidity prob- The High case projections of uncertainties about the future lems are dealt with promptly. Chapter 2 are not ambitious in course of capital flows. The "real" (See box on Debt relief, page 59). relation to the future supply of environment in which the capital Such changes will have the most capital. Surpluses of the oil export- flows operatethe global surplus impact on the middle-income ers and, later in the decade, of the and deficitwill be affected by countries but, for the low-income industrial countries could provide the trade, monetary and fiscal pol- countries, the remedyto higher counterpart savings; finan- icies of the developed, developing improve the flow of concessional cial institutions could intermedi- and OPEC countries. Operations financeis more easily described ate larger volumes of finance; and of the financial intermediaries will than achieved. richer countries could give more be more directly influenced. The 63 6 Country experience: managing adjustment The previous three chapters have major implications for the rest of tances. But African countries analyzed the way the world econ- the world as well. especially were beset by domestic omy reacted to the difficulties of Different countries adjusted in problems and could neither the 1970s. They showed that global different ways. In general terms increase their exports nor borrow adjustment was helped by a industrial countries increased much; they had to cut imports and variety of factors: a slight decline their exports to the capital-surplus endure stagnation. in the real price of oil from 1974 countries and slowed down their This chapter explores in detail until 1978; steeply rising imports growth. Middle-income countries the diverse experience of country in the oil-exporting countries; and borrowed heavily in the capital groups and a number of countries. larger capital flows from surplus markets; some also replaced It looks first at the oil-importing to deficit countries. But these were imports and increased their export developing countries; then at the not enough to prevent the final penetration of industrial country oil exporters, both capital-deficit form of adjustmentslower markets. Some low-income coun- and capital-surplus; at China; and growth, notably in the industrial tries were helped by good crops, finally at the nonmarket industrial countries and therefore with and more aid and workers' remit- economies. The oil-importing developing countries Some problems of adjustment Structure and policy Low-income oil importers are were common to all oil-importing divided into: countries, but the intensity of the The relations between economic Large, partially industrialized external shocks and individual structure, policy responses and countries ("populous South Asia") responses to them varied enor- external shocks have been and mously. Governments not only analyzed for a group of 47 oil- Least developed countries had to aim at balance-of-payments importing developing countries. (primarily in sub-Saharan adjustment; they also had to They have been divided into four Africa).Table 6.1 lists the countries choose investment and produc- representative sub-groups that belonging to each group. hon priorities so as to minimize differ in their basic economic The structural characteristics of the loss of growth involved in characteristics and policy options. an economy are, of course, the restoring their external accounts. In relation to the analysis of pre- result of historical circumstances Some were notably successful. vious chapters, these extend the and past policies. They include Others were not. But in every distinctions made by income level such elements as the degree of case, their economic performance and trade structure. reliance on a few commodities for was determined by the structure Middle-income oil importers are export earnings, the share of of their economy; the policies they divided into: manufacturing in GDP, the level of followed; and the nature and Semi-industrial countries, and human development and the role intensity of the shock. Primary producers. of the state in economic life. A 64 Table 6.1 Developing-country groups Country group Middle-income Low-income Semi- Argentina* Portugal* industrial Brazil* Romania Colombia* Singapore* Egypt* South Africa Greece South Korea* Hong Kong Spain Israel* Turkey* Mexico* Uruguay* Philippines* Yugoslavia* Primary Albania Lebanon Burma* producing Bolivia* Liberia* China Cameroon* Malaysia* Kampuchea, Dem. Chile* Mongolia Madagascar* Costa Rica* Morocco* Mauritania* Cuba Nicaragua Mozambique Dominican Rep. Panama Sierra Leone* El Salvador Papua New Sri Lanka* Ghana* Guinea* Togo Guatemala Paraguay Viet Nam, Soc. Rep. of Honduras* Peru* Zaire* Ivory Coast* Senegal Jamaica* Thailand* Jordan Tunisia* Kenya* Zambia* Korea, Dem. Zimbabwe Republic Populous Bangladesh*a South Asia India* Pakistan* Lowest income sub-Saha ran Africa Other Least Benin Malawi* Afghanistan developed" Burundi Mali* Bhutan Central African Niger Haiti Republic* Rwanda Lao, P.D.R. Chad Somalia* Nepal Ethiopia* Sudan* Yemen, Arab Rep. Guinea Tanzania Yemen, P.D.R. Lesotho Uganda* tipper Volta Oil exporters. Algeria** Nigeria** Indonesia** Angola Syrian Congo, P.R. Arab Rep. Ecuador** Trinidad and Iran Tobago** Venezuela** Note: Includes countries with populations of at least 1 million. Italics denotes inclusion of a country among the case studies in the text. Country included in calculation of analytical group total in Table 6.2. **Country included in group discussion of capital-deficit oil exporters. Also a least developed country. Based on UN classification. number of these characteristics fared quite differently in response External shocks and modes of may limit the range of adjustment to comparable external shocks. adjustment policies available to any particular This chapter examines a number country. of country case studies to help Table 6.2 (overleaf) shows the At the same time, domestic isolate the role of policy in extent to which the balance of pay- economic policy has a crucial role influencing adjustment within ments of different country groups to play; countries with broadly the broad structural constraints were affected by the external similar structural features have characterizing the group. environment between 1974 and 65 1978. These calculations are group's export prices rose more tries export mainly primary prod- explained in detail in the Technical than world prices). ucts whose markets grew slowly Appendix, but the key factors are Export volume shortfalls aris- as a result of the OECD recession. (1) international price effects-the ing from the 1974-75 OECD reces- Countries had three basic ways extent to which adverse move- sion were roughly as important as of responding to these external ments from a 1971-73 base in international price effects for the shocks: import and export prices relative semi-industrial countries. They structural adjustment, which to world prices affected countries' were somewhat more impor- involves switching resources to the import expenditures and export tant for the primary producing production of exports and import earnings; and (2) export volume countries. substitutes (including substitutes effects-the shortfall in export But they were significantly un- for imported energy). When demand arising from worldwide equal for the low-income coun- accompanied by a rise in domestic recession. Both are expressed as a tries. saving, such a reallocation reduces percentage of GNP; together they Export volume effects were the trade deficit and is therefore a permanent form of adjustment. This process may be helped by: Table 6.2 Balance-of-payments effects of external shocks and modes external financing, which can of adjustment in groups of oil-importing developing countries, add to imports and investment 1974-78 averages and give countries time to invest (percentage of GNP) borrowed capital in ways that will Primary Populous Least Item Semi-industrial producing1 South Asia developed eventually promote structural External shocks adjustment. But sooner or later International price effects 0.90 1.65 1.26 0.14 trade deficits have to be reduced to of which, levels that are financeable in the Export price effects -0.83 -3.21 -0.19 -2.07 long term. Some countries were Import price effects 1.73 4.86 1.45 2.21 left with no choice but: Export volume effect 0.91 1.99 0.69 1.39 Total 1.81 3.64 1.95 1.53 slower growth, which nar- rows current account deficits by Modes of adjustment Structural adjustment 0.78 0.61 -0.31 -2.03 restricting imports. of which, For many reasons, country Export market penetration 0.09 0.30 -0.51 -3.49 adjustment with high domestic Import substitution 0.69 0.31 0.20 1.46 saving and investment and only a Additional real external financing2 3 0.45 2.54 2.35 3.03 temporary interruption in growth Slower growth 0.58 0.49 -0.09 0.53 is preferable to adjustment Total 1.81 3.64 1.95 1.53 effected mainly through an Figures for this group are 1974-77 averages. extended period of slower growth. Nominal external financing deflatedby an international price index. First, programs to expand the pro- Comprises changes in capital flows, reserves, services and transfers. duction of energy and tradeable goods require substantial new investment; the enormous capital provide a measure of the impact of roughly 55 percent of interna- costs of energy development pro- external shocks on the balance of tional price effects for populous grams alone have been noted in payments. South Asia. This was because Chapter 4. Second, a high-invest- Table 6.2 illustrates four points India's and Pakistan's manufactur- ment economy is able to "turn about external shocks. ing exports, which form a large over" its old capital stock quickly International price effects part of their merchandise exports, so as to reflect new scarcities, were adverse for every country were directed mainly to other especially more expensive energy. group. This occurred because developing countries rather than Third, an economy with rising unfavorable import-price effects to the industrial countries which domestic saving is able to support (the extent to which the rise in a were in the grip of recession. necessary new investment, group's import prices exceeded Export volume effects were restrain domestic demand for the general rise in world prices) 10 times as important as inter- exportables and import substi- more than offset favorable export- national price effects for least tutes and narrow the trade deficit. price effects (the extent to which a developed countries. These coun- Fourth, the sacrifices involved in 66 saving and investment are easier Table 6.3 Percentage rate of change in the consumer price index, to make in a growing economy, selected developing countries, peak of 1956-70 and mid-1970s where consumption need not Peak Annual averaged Annual average Country 1956-70 1973-74 19 75-76 actually decline to permit an increase in domestic saving. Bolivia 11.2 47.8 20.2 6.3 35.3 Brazil 87.0 Finally, there is evidence-for a Egypt 14.9 7.6 10.0 more careful statement, see the El Salvador 5.7 11.6 15.1 1980 World Development Report- Ghana 25.4 17.2 46.9 that economic growth generally India 13.8 22.4 -1.0 South Korea 27.9 13.4 28.4 contributes to the alleviation of Morocco 6.1 10.9 8.2 poverty. The burden of adjust- Nigeria 13.9 9.2 27.6 ment can be more equitably Pakistan 11.3 24.9 14.0 7.1 Philippines 14.4 22.7 distributed in a growing economy, Sri Lanka 7.4 10.9 4.0 a theme partially explored in the Sudan 12.6 22.0 12.8 next chapter of this Report. Thailand 6.2 17.5 4.1 Venezuela 5.0 6.2 8.9 The desirability of adjusting to external shocks through growth a. Average of price rises over the years shown. Source: Bhalla. must be tempered by a recogni- tion that developing countries with GNP per person ranging The average pattern of adjust- were faced with the need to con- from under $500 a year for Egypt ment conceals substantial tain strong inflationary pressures to over $4,000 for Israel and Spain. differences between countries. in the 1970s. A study of some 25 The high share of manufacturing Their responses can be analyzed developing countries (excluding in production and exports made in terms of the development Argentina and Chile which were for considerable flexibility and strategy they pursued before 1974 afflicted by hyperinflation) reveals creditworthiness and allowed and the reforms they introduced that in most cases the mid-1970s them to borrow from private capi- in the wake of external shocks. were characterized by inflation tal markets in the 1970s. An outward-oriented ap- that equalled or exceeded histor- As a group, they relied on exter- proach. South Korea provides an ical peaks (Table 6.3). While nal financing at the beginning of example of a country which has domestic policy was important in the 1974-78 period. The share of achieved spectacular results this process, a significant con- commercial lenders in their public through export-led growth and tribution to the synchronization of and publicly guaranteed debt rose which did not alter its strategy world inflation was made by rising by 27 percent between 1972 and during the period 1974-78. Its import prices. To this must be 1978. Disbursed debt to GNP ratio experience in foreign markets, added the fact that dearer petro- rose from 10 percent to 16 percent together with a devaluation in leum and manufactured inter- during the same period while the 1974, led to further gains in export mediate imports, by raising the debt-service ratio rose from 9 per- market shares and significant cost of production, exerted a con- cent to 15 percent. However, the import substitution. Domestic tractionary influence on the sup- group as a whole increasingly saving and investment shares ply of goods and services. The turned to enlarging their penetra- went up considerably, the effi- combination of rising prices and tion of export markets (mainly in ciency of investment rose and sluggishly growing output re- manufacturing) and substituting adjustment was effected with sulted in a stagflationary environ- strongly for imports, so that struc- growth (see box on South Korea, ment. The pursuit of adjustment tural adjustment ultimately overleaf). with growth in such circum- accounted for over 40 percent of Among countries which had stances was a particularly difficult their overall adjustment to exter- earlier followed an inward-look- task. nal shocks. Additional external ing development path, Uruguay financing was responsible for 25 and, to a lesser extent, the Philip- Middle-income oil importers percent of adjustment during pines responded to the external 1974-78. Almost one-third of the shocks of the 1970s by liberalizing Semi-industrial countries balance-of-payments accom- their trade regimes and undertak- Semi-industrial countries form the modation to the changing mg structural reforms. Substantial richest group among the oil- environment occurred through external financing was available to importing developing countries, slower growth. buy imports needed for export 67 South Korea In the mid-1950s South Korea's "modern" skilled and literate workforce, reconciled trade balance improved very significantly sector was small. Manufacturing con- substantial wage increases with moderate between 1974 and 1977 (see figure). This stituted 6 percent of GDP, most industrial inflation. In 1973 GDP grew by a remark- was due roughly equally to import and much infrastructural capacity having able 15 percent and inflation was only substitution, mainly in machinery and been located in North Korea. Manufac- 3 percent. consumer durables, and to increases in tured exports were almost unheard of. Rapid industrialization had, however, world market shares of South Korean Until 1962 economic policy emphasized left South Korea heavily dependent on exports. import-substituting industrialization. imported oil. When oil prices rose in During the five-year period 1974-79, This was followed, comparatively early in 1973-74, the deterioration in the terms of GNP accelerated, growing by an average the industrialization process, by a switch trade resulted in a resource loss 10.1 percent a year. Consumption to promoting exports. For the next 10 equivalent to 4.5 percent of GNP and a declined as a share of GDP from 82 per- years GDP rose at over 9 percent a year. fivefold jump in the current account cent in 1971-73 to 78 percent in 1974-76. Investment's share in GDP almost deficit to 11 percent of GNP. The govern- doubled and was substantially financed ment initially accommodated this by out of domestic savings. Capital was used increasing foreign borrowing (which highly efficiently: the incremental capital- totaled 11.3 percent of GNP in 1974 and 9.5 South Korea output ratiothe extra investment percent in 1975). But it then opted to cut Terms of trade, 1970-79 back the deficit through tradeboth (0970-73 = 000) export expansion and import substitu- tionrather than by slowing down 110 South Korea growth. Export and import volumes Between 1974 and 1978 (see figure), 105 (1963 000( South Korea's export volume recorded a 100 7,000 spectacular increase in a wide range 6,000 of manufactured goods. This was 95 accomplished by a number of measures. 5,000 - Espoau The currency was devalued by 22 percent 90 in 1974. Exporting firms continued to 4,000 enjoy automatic access to imported raw materials at world prices and subsidized 3,000 - credit for working capital at a time when 80 2,000 credit for import substitution and 0 I I I I nontraded goods was restricted. South 1970 71 72 73 74 75 76 77 78 79 1,000 - Korean firms were also successful in win- ning contracts in the booming Middle Av. 1963 70 71 72 73 74 75 76 77 78 79 East construction market: by 1978 the -69 Current account and components value of construction contracts stood at Savings and investment rates corre- Bill,,,,, ,f 3,/I,,,, ',,rc',U $15 billion, and workers' remittances spondingly rose (see figure). Inflation, +1 Balance on crevices and ,eansrers helped to swell foreign exchange receipts. fueled by the oil price increase, acceler- However, short-term measures were ated to 24 percent in 1974, falling to 15 less significant than established policies percent by 1976. Real wages, which had fallen by 6 percent during 1974, were held ir aimed at promoting exports. Two institu- tions set up in the 1960sthe export in check relative to foreign wages for two target system and the Export Promotion years after a 22 percent devaluation of the Conference (at which the President of won in December1974. This helped main- Current acceunt balance South Korea personally presided)were tain the country's competitiveness, used to intensify the pressure to export. though the real exchange rate (the nomi- They helped to coordinate government nal rate adjusted for South Korean rela- and private sector efforts in response to tive to US prices) then started to appreci- -5 I short-term problems and opportunities. ate. Between 1972 and 1978 domestic costs Av. 1963 70 -69 71 72 73 74 75 76 77 78 79 The marketing and intelligence facilities rose by 20 percent relative to those of the government export marketing abroad. organization (KOTRA) and of the export The second oil price rise of 1979-80 oc- trade associations of individual industries curred just as policies were shifting to a needed to produce an extra unit of out- were also influential. contractionary stance in response to an putaveraged 2.5 in 1964-73, one of the In dollar terms, exports almost doubled overheated economy. It implied a lowest in the developing world. Rapid between 1974 and 1976, and by 1977 had resource transfer equivalent to 6.6 per- productivity growth, facilitated by a nearly closed the gap with imports. The cent of GDP and resulted, over 1979 and 68 industries and cushion the period its commitment to growth. But between rising import prices and its domestic policies did not growing export volumes. They too encourage saving or efficiency in boosted saving and investment the use of investible funds, and 1980, in current account deficits and growth gradually picked up. equivalent to about 7 percent of GDP. In the growing burden of nominal October 1979 the assassination of the debt, together with poor harvests, President heightened political tensions An inward-looking approach. eventually led to a cut in growth and led to unrest and a change of govern- Turkey and pre-1976 Argentina (see box on Brazil, overleaf). Both ment. It proved difficult to check the continued with their inward-look- Israel and Yugoslavia economized momentum built up in expansion over ing policies in response to external on imports. Domestic savings per- the last few years. High investment demand tightened labor markets and shocks, These amounted to 1 per- formance did not improve sub- caused an acceleration in wages, under- cent of GNP in Argentina and the stantially and structural adjust- mining the competitiveness of South country was preoccupied with ment was limited. They relied on Korean exports, which actually declined internal problems and runaway slower growth to reduce balance in real terms over 1979. Contraction was accentuated by the increase in production rates of inflation. Adjustment of payments deficits, although costs due to the rapid passing through of occurred mainly through import both recovered slightly toward the rising petroleum prices to the domestic substitution throughout the end of the period. economy. Domestic currency prices of period and through gains in Table 6.2 indicates that, of all imports were further increased by a 20 export market shares in primary the country groups, the semi- percent devaluation in January 1980. products in 1977 and 1978. The These factors, plus a disastrous harvest, industrial countries relied the combined to raise the rate of inflation application of restrictive demand- most on structural adjustment. from 18 percent in 1979 to 28 percent in management policies after 1976 This was possible because of a flex- led to a marked decline in eco- ible production-cum-trade struc- nomic growth. External financing ture, as represented by a high South Korea: savings and was over one-and-a-quarter times share of manufacturing in GDP investment rates, 1963-73 and as large as external shocks in and exports and substantial physi- 1973-79 Turkey and was used to boost the cal and human resources. Struc- Percentage of GOP, constant prices growth rate between 1974 and tural adjustment principally con- 40 1978. Export market shares fell sisted of import substitution; ex- 35- and import dependence increased, port market penetrationthough heightening the country's vulner- positivewas the least important 30- ability to the external shocks of mode of adjustment for the group 25- 1979. A comprehensive and far- as a whole. Notwithstanding their reaching reorientation of economic relatively easy access to private 20- policies was initiated in 1980 and capital markets, semi-industrial Investment 1981, aimed at restoring economic 15 - countries did not rely very much Savings growth and controlling inflation on additional external financing 10 - through greater emphasis on compared to other oil-importing 5- exports and increased reliance on developing-country groups dur- market forces. A flexible exchange ing the 1974-78 period as a whole. 0 Av. Av. rate policy was adopted; interest The importance of slower growth 1963-73 1973-79 rates and prices charged by State in overall adjustment was 32 per- Economic Enterprises were de- cent and was exceeded only in the regulated and a major tax reform least developed countries where 1980 and effected a 5.7 percent decline in real GNP over 1980. was enacted. the corresponding ratio was 35 In 1980 the government initiated a percent. This result is attributable series of measures aimed at improving the Countries such as Brazil, Israel to a marked slowdown in growth external resource balance through struc- and Yugoslavia, which had earlier during 1974-79 in Israel, Portu- tural adjustments. These include facilitat- lessened their bias against exports gal, Singapore and, to a lesser ex- ing the extension of credit for exports, maintaining incentives through exchange after many years of inward-look- tent, Yugoslavia relative to that rate policy and initiating efforts to moder- ing industrialization, allowed achieved between 1963 and 1973. ate increases in wages. incentives to export to weaken The adjustment experience of again. Brazil borrowed heavily in countries within the group sug- 1974 and 1975 and did not abandon gests that those which were 69 Brazil In addition, the terms of trade deterio- decelerate during the second half of the rated by 20 percent over 1974-75. About 1970s. During an unprecedented spurt in half of the increase in the total import bill Disbursed debt rose nearly fourfold 1967-73, Brazil's industrial growth over its 1972-73 level was due to increases between 1973 and 1978 to the equivalent of averaged 13 percent a year and GNP per in prices (and about half of that due to 25 percent of GDP; and the debt-service person rose at over 7 percent a year. ratio (including medium- and long-term Although the benefits of growth were private debt) reached 56.4 percent. unequally distributed, in the process of Increased borrowing from abroad was "trickle down" gains in absolute income Brazil reflected in the growing gap between levels appear to have been widespread. domestic savings and investment. Invest- Terms of trade, 1970-79 Investment was largely financed ment priorities emphasized heavy infra- (1971-73 = 1001 domestically. The share of manufactured structure and capital-intensive import exports in manufactured output rose, substitution. 130 aided by outward-oriented policies. O GNP rose by an average 7 percent a The annual current account deficit 120 year in 1974-78, compared with 8 percent averaged only 2 percent of GDP in a year in 1966-73 and 11.5 percent a year in 1967-73, but then jumped to 7 percent in 110 1967-73. 1974 and 5.6 percent in 1975. The higher Compared with its 1973 level, the 100 oil prices of 1973-74 hit Brazil at the peak Brazilian real exchange rate (the nominal of its boom. High capacity utilization, 90 rate adjusted for changes in Brazilian rela- combined with stockbuilding in the face tive to US prices) changed little during of rising inflation, boosted the volume of 80 1974-78, real appreciation in 1975 being imports by about 30 percent in 1974 (see reversed in subsequent years. As a pro- figure). The economy was heavily depen- 70 portion of demand, imports were dent on imported oil (which still satisfies squeezed to below their 1973 levels (see over 80 percent of petroleum require- 1970 71 72 73 74 75 76 77 78 79 figure) through tariff increases, advance ments, despite major oil exploration deposit requirements and import restric- efforts). tions. The resulting bias against exports was partially offset by tax and credit sub- higher prices for manufactured imports); sidies. Coupled with the 1977 improve- Brazil the rest was caused by higher volumes. ment in the terms of trade, this allowed Slower growth in export markets was less virtual trade balance by 1977. It was Export and import volumes important than terms-of-trade effects in followed by a relatively small deficit in (1963 = 100) 450 1974-75, but the terms of trade then 1978, due partly to a disastrous harvest. recovered ground as coffee prices rose. Brazilian adjustment to higher energy Brazil did not readily abandon the prices has proceeded apace. Massive growth ethic in response to the hardened investments aimed at reducing depen- external environment. An ebullient sense dence on imported oil have been made, of "manifest destiny" had been created, notably through the conversion of sugar- and the new government, which came to cane to alcohol. In the longer run, power in 1974, was committed to continu- hydroelectric potential is estimated at ing, if not bettering, the successes of its over 200 million kilowatts (around 10 predecessor. Growth was also seen as times present capacity). Shale and coal necessary to ease the process of political deposits are also promising options for liberalization. This led to the adoption of energy diversification. Current account and components expansionary domestic policies and sub- The impact of the 1979-80 rise in oil B,ll,o,,, of dollars, current prices stantial external borrowing, to a deferral prices has been considerable. By 1980 the +2 of adjustment and eventually to slower fuel import bill had risen to 44 percent of growth. total merchandise imports. The interest 0 Domestic demand was maintained rates charged on its foreign debt also rose through public sector deficits and sub- sharply, and the current account deficit sidies effected through the credit system. widened to the equivalent of 5 percent of Interest rates charged on credit programs GDP. A wide range of fiscal, monetary administered through the Central Bank and price policies was introduced to curb and Bank of Brazil remained almost con- demand; exports were encouraged by a stant while inflation accelerated from 13 large devaluation during 1979, when the percent in 1973 to 44 percent in 1977. They exchange rate moved from 21 to 43 rose later, but not enough to match the cruzeiros to the dollar. But, despite 10 spiral in inflation toward 100 percent attempts at adjustment, an increased debt annually after 1979. Negative real interest burden heightens Brazil's vulnerability to 12 rates diverted savings from productive international monetary shocks and to Ày. 1963 70 71 72 73 74 75 76 77 78 79 -69 investment. Savings, which had grown slower growth in the demand for its rapidly from the mid-1960s, began to exports. 70 largely successful in achieving price effects, since unfavorable External borrowing was moderate adjustment with growth import price movements were in all countries except Tunisia, and either maintained or switched nearly offset by higher prices for the bulk of adjustment occurred to a policy of not discriminating cocoa, coffee and tea in 1976-77. through trade policy. Export against production for exports But they were significantly expansion and import substitu- relative to that for the home damaged by slow growth in the tion proceeded at an impressive market; markets for agricultural com- rate within the framework of a stepped up private and public modities, so that the overall exter- very open economy in Thailand savings; and nal shock was adverse for agricul- But they were not to be accom- increased the share of invest- ture-based primary producers. By panied by reform of domestic ment without detriment to its effi- contrast, losses arising from inter- energy pricing and interest rate ciency. national price effects were par- policy until late in the decade (see ticularly severe for the mineral- box, overleaf), and the economy Primary producing countries based economies and roughly was left uncomfortably exposed to Primary producers include a large twice as large as export volume the external shocks of 1979-80. number of (mainly) middle- effects. Gains in export market shares income countries that are either Table 6.2 shows that primary were also registered in a whole agricultural- or mineral-based. producing countries resorted to range of primary commodities in Their economic well-being and substantial external financing the Ivory Coast and Tunisia. The export earnings have historically which averaged nearly 70 percent share of investment was main- been dominated by a few primary of external shocks during 1974-77. tained and adjustment was productsfor example, tea, cof- Their structural adjustment, effected with growth. fee, cocoa, phosphate, tin or rub- which was divided almost equally Inward-orientation in agricul- ber. For predominantly agricul- between export market penetra- ture-based economies. Kenya tural countries, the share of the tion and import substitution, was moved from being an open econ- three most important com- limited. It accounted for less than omy in the 1960s to one where the modities in export earnings 20 percent of total adjustment, incentive system had begun to be ranges from roughly 70 percent partly because of inflexibility in tilted against cash crop exports for Ghana, Ivory Coast and Sri production and partly because of and in favor of production of Lanka to around 50 percent for development policy. The process manufactured goods for the Malaysia and Senegal and under of industrialization in a number of domestic market. This process 40 percent for Thailand. The these countries led to increasing was further intensified in the wake mineral-based economies tend to reliance on imports of capital of the external shocks of 1974-78 be even more undiversified; the goods and manufactures. The and accompanied by losses in corresponding ratios are in excess average adjustment pattern is con- nontraditional primary and of 80 percent for Mauritania, Zaire sistent with considerable varia- manufactured exports, in part due and Zambia, nearly 70 percent for tions, of which five types may be to the breakup of the East African Bolivia and Chile and around 60 distinguished. Community. Recourse to external percent for Peru. Specialization in Outward-orientation and di- financing was moderate and tree crops or minerals, together versification in agriculture-based domestic savings performance with the necessary infrastructure, economies. Ivory Coast, Thailand was satisfactory. The bulk of ad- leads to a highly inflexible pro- and Tunisia are examples of pri- justment occurred through im- duction structure and extreme mary producers that maintained port substitution which, together vulnerability to international price their outward-looking policies with slower growth, was twice as movements and export volume and diversified their exports. This important as external shocks. This shortfalls. provided raw materials for pro- mode of adjustment reduced Primary producing countries cessing industries, generated a structural flexibility and led to were hardest hit by external home market for industrial output moves toward greater outward shocks. Export volume shortfalls and earned foreign exchange for orientation at the end of the were 20 percent larger than inter- imported inputs for their decade. national price effects for the group manufacturing industries. For the Slower growth without re- as a whole in 1974-77. The agricul- Ivory Coast and Tunisia, the ex- form in mineral economies. ture-based countries were not ternal environment actually Jamaica, Peru, Zaire and Zambia much affected by international improved slightly over 1974-78. were all forced to cut growth rates, 71 Thailand Jamaica Thailand During the 1960s Thai GDP grew at 7.6 During the 1960s Jamaica's GNP rose at Terms of trade, 1970-79 percent a year. The momentum slowed 4.6 percent a year. Agriculture grew (1971-73 = 100) between 1970 and 1975 to 6.2 percent, but slowly, there was increased rural to urban oil price increases were not the major fac- migration, and industrial expansion was 130 tor. The initial balance of payments effect promoted behind high levels of protec- of the oil price increase was cushioned by 120 hon. Private foreign investment played a higher export prices, increased service major role in expanding tourism and earnings and private transfers (see 110 bauxite productionthe twin pillars of figure). Adjustment was thus not im- growth in the Jamaican economy. Private 100 mediately seen to be necessary, despite a domestic investment was the major driv- doubling of the share of oil in total 90 ing force behind the development of imports to 21 percent. industry and services. To sustain growth, policy after 1975 80 The government which came to power included controls on energy and cement in 1972 was committed to (1) expanding prices, a ceiling on interest rates, increas- 70 ing protection, expanded public sector expenditures and deficits, and rapid 1970 71 72 73 74 75 76 77 78 79 credit creation to support higher demand. Jamaica Export growth was exceptional during this period (see figure). GDP grew at 8 Export and import volumes percent a year from 1975 to 1979 but high The government had until recently (1963 300 1001 investment tended to involve current failed to take the necessary steps to deficits, which increased with the encourage energy conservation and pro- 250 - deterioration in terms of trade after 1976 mote domestic supplies. After retail and declines in services and private prices of virtually all petroleum products 200 transfers. were increased between July 1973 and February 1974, they were held constant 150 - until March 1977. This was partly because energy prices constituted a very sensitive 100 Thailand political issue and partly because Export and import volumes increases were thought to be injurious to 50 - (1963 11)0) growth. Petroleum product prices were, 450 however, raised in January 1979, July 0) I I 1970 72 73 74 75 76 77 78 79 1979, February 1980 and January1981 for a 71 cumulative increase of around 120 per- Current account and components cent, and power tariffs have been Billion, of dollars, current prices increased to eliminate subsidies to the +2 Balance on services and transfers electricity generating authority. Trade balance +1 The doubling of oil prices in late 1979 I i1 led to a widening of the current account deficit (see figure) to $2.4 billion or 7 per- 100 - cent of GDP in 1980, with oil making up 7 over 25 percent of total imports. This has IiIiiI 111111 q1lii Av. 1963 70 -69 71 72 73 74 75 76 77 78 79 encouraged measures to promote struc- tural adjustment with equity. The draft -4 - Current account and components dlionn of dollars, current prices 1982-86 plan represents a significant shift -s - in policy from growth toward distribu- -6 - tional tonsiderations, particularly rural Current accnunt balance -7 I I I I I I poverty alleviation; and toward external I 1970 71 72 73 74 75 76 77 75 79 balance. Fiscal and monetary policies are intended tobe less permissive. The major concerns include the intensification of agriculture, increased industrial effi- ciency, and promotion of employment and eventually suffered a fall in and manufactured exports. The plan also GNP. A combination of internal stresses the need to reduce consumption policies and external shocks of energy, particularly oil, through pric- brought Jamaica to the verge of ing and energy conservation programs, -2.5 I I I I I I I and to develop domestic energy economic bankruptcy and GNP Av.1963 70 -69 71 72 73 74 75 76 77 78 79 resources, especially lignite, natural gas steadily fell after 1973 (see box). and renewable energy sources. Peru, which engaged in massive foreign borrowing, failed to 72 but eventually one of its causes), and intensive investment toward consump- Jamaica three years of declining output led to the tion of domestically produced goods. By Terms of trade, 1970-79 virtual exhaustion of Jamaica's foreign 1980, GDP was nearly 18 percent below its (1971-73 = 100) exchange reserves and creditworthiness. 1973 level, with the sharpest falls being in The government attempted to negoti- manufacturing (31 percent), construction 175 ate a medium-term support program with (58 percent) and mining (10 percent), the the IMF although it ultimately rejected last of which had been an important 160 the prescriptions in the program. Policies source of foreign exchange and growth in to balance expenditures with resource the 1960s and early 1970s. High levels of 145 availability varied from year to year. They unemployment (15 percent of the labor 130 included tighter price controls; restrictive force), growing scarcity of consumer fiscal measures (principally higher taxes goods in domestic markets, and inade- 115 rather than spending cuts); and exchange quate resources for maintaining and rate devaluation, to correct for the upgrading social services had eroded the 100 differential between internal and external relatively high living standards enjoyed inflation. Despite efforts to stimulate the by most Jamaicans at the beginning of 85 private sector, however, there was an the 1970s. 0 increasing reluctance on the part of inves- In late 1980 a new government came to 1970 71 72 73 74 75 76 77 78 79 tors to commit resources to new projects. power. It has negotiated a three-year pro- Jamaica compensated for the deteriora- gram with the IMF, agreed on structural tion in its external position during this reforms with the World Bank, and period mainly through a reduction in received pledges of substantial foreign imports. This in turn caused a decline in aid in support of its medium-term he role of the public sector in creating a domestic output, and a shift in the com- development strategy. This includes: fore diversified economy; (2) creating position of spending away from import- Reforms in the country's tax struc- increased employment opportunities for ture, deregulation and reduction of state the large numbers of urban unemployed; ownership of companies (those which and (3) redistributing income. A sharp were once private but are now in the increase in the bauxite levy on foreign hands of the government). firms and heightened political rhetoric Jamaica: savings and Measures to increase agricultural reduced private investment. The subse- investment rates, 1963-73 production, including special assistance quent decline in economic growth was and 1973-78 to the sugar cooperatives, reconstruction aggravated by adverse external shocks in the banana industry, and strengthen- Percentage of GDP. constant prices equivalent to 9 percent of GNP. These 30 ing of extension services and marketing ncluded the quadrupling of petroleum facilities. prices and reduced demand for tourism Greater incentives in favor of exports related to the 1974-75 recession in North and gradual reduction of protection to America, and more important, to grow- some industries. Jamaica's nontraditional ing social and political unrest in Jamaica, exports are predominantly sold within itself partly due to worsening economic the Caribbean Common Market. The conditions. small size of this market is likely to limit Expansionary policies caused the export growth, so efforts to expand sales central government deficit to increase to other markets are expected to assume from 4 percent of GDP in 1972 to almost 20 Investment increasing importance. percent in 1976. Large wage increases An aggressive tourism drive aimed at Savings were granted and consumption increased raising the current low hotel occupancy from 78 percent of GDP in 1972 to 90 per- rate, coupled with measures to stimulate cent in 1976. A large current account private investment in new hotels. deficit (10 percent of GDP in 1976), Av. Av. Active promotion of private invest- emigration of skilled manpower (initially 1963-73 1973-78 ment in bauxite mining and aluminum one of the main results of falling output, refining. undertake significant structural forthcoming until the mid-1970s deficits and high inflation in all adjustment until 1978. Extreme after which they had to reduce four countries. dependence on copper and cobalt their growth. Roughly half of the Structural reform in a mineral in Zaire and Zambia made for 1974-78 balance-of-payments economy. Chile, like the pre- great vulnerability to movements accommodation was achieved viously discussed cases of Uruguay in copper prices; their terms-of- through slower growth. Savings and, to a lesser extent, the Philip- trade losses were catastrophic. performance was weakdue to pines, is an example of a protec- Substantial external financing was lack of incentives, large budget tionist economy that was trans- 73 formedin its case when a steep accompanied by relatively high phosphate revenues fell after 1975. decline in copper prices, on top of unemployment. Eventually they had to adopt domestic upheavals, resulted in "Overshooting" adjustment. restrictive policies and curb their radical structural reforms. These Countries such as Morocco and growth. included a massive real devalua- Senegal exemplified the difficulties The experience of the primary tion and deflationary monetary of volatile commodity prices (see producers suggests that those and fiscal policies. Saving and box on windfall gains). Both coun- which encouraged and diversified investment both increased as a tries derive a large proportion of their exports and improved sav- share of GNP, and the efficiency their export earnings from phos- ings performance managed adjust- with which capital was used also phates. The 1974-75 boom in ment with growth. But many of improved. Chile gained export world phosphate prices, which them, especially some mineral market shares in manufacturing was expected to last longer than it producers, have a production- and also achieved considerable did, encouraged substantial cum-trade structure that limits the import substitution. The growth foreign borrowing and led to their range of options in the medium rate, after an initial fall, has formulating investment plans that term, necessitating either external improved since 1976 but has been proved too ambitious when financing or slower growth. Managing windfall gains At various times in 1974-77, there were rowing abroad. But its external debt-ser- the proceeds of its post-1975 uranium sharp price increases in phosphates, vice ratio increased significantly between boom by 1979. coffee, cocoa, uranium and several other 1975 and 1978 (when it reached 21.8 per- The experience of these price fluctua- commodities important to developing cent) and it became clear that retrench- tions highlights the need for: countries. Paradoxically, many exporters ment was needed. Togo also applied its Careful analysis of export price of these commodities now face difficulties phosphate "windfall" to investment. But prospects. Treating a boom as temporary partly as a result of the way they managed it too encountered financial difficulty makes it easier to plan the right mix of their windfall gains. Typically, govern- after prices fell in 1975, despite the coffee expenditure and saving. ment revenues have been boosted by and cocoa boom that started in 1976. Effective controls on spending. An higher export earnings (either through Senegal increased public sector invest- important factor in Ivory Coast's invest- taxation or participation in profits) and ment, but total investment did not ment surge was the management of the used to raise domestic expenditure to a increase. Much of the public investment Agricultural Price Stabilization Fund (the level that cannot be sustained when went into unproductive areas, and the "Caisstab"). This received the export prices fall. Countries take advantage of private sector was discouraged from revenue surpluses, but operated largely their credit standing to borrow on com- investing, mainly because of the govern- outside formal budgetary control. In mercial terms to maintain expenditure. ment's state participation policy. The end logo, budgetary procedures were by- If the initial rise in public spending of the phosphate boom coincided with passed or abandoned. leads to higher growth (and especially increased groundnut prices (the principal Productive investment based on care- higher exports) in the relatively near export), postponing the need to reduce ful project selection. Some 17 percent of term, it can be sustained. But if growth spending. In 1977 a period of budgetary Ivory Coast's investment program was for does not increase sufficiently, the result is stringency followed. 12 sugar complexes (later cut back to 6) an increased debt burden. Eventually this In response to the coffee and cocoa that would have produced an exportable forces sharp and damaging spending boom, Ivory Coast increased aggregate surplus at production costs well above cuts, often at a time when export prices investment by 120 percent in real terms world prices, logo, small and poor, are falling. from 1973-75 to 1977-79, and sustained it undertook ambitious projectsan oil This patternand exceptions to it later by external commercial borrowing. refinery, a steel mill, a thermal power can be illustrated by several examples. Domestic inflation accelerated and, by plant, hotels. Phosphate prices rose sharply in 1974, 1978, it was clear that investment had to These principles cannot be imple- and the prospects for further rises be cut. Kenya, by contrast, channeled less mented unless there are effective appeared good at the time. In Morocco, of the coffee boom proceeds into the arrangements for analyzing price pros- investment as a share of GDP conse- public sector. Despite increases in public pects, scrutinizing and deciding upon quently doubled by 1977. But government spending, much of it on defense and to investment prospects, and evolving current spending also rose, much of it on replace the former East African Com- development strategy. Many countries, badly needed social programs. The munity institutions, the overall budget especially in Africa, lack the means of expansion, however, outstripped availa- remained under control although doing this work. High priority should be ble resources once phosphate prices development-oriented recurrent outlays given to developing the finance and plan- started to decline. Initially, Morocco was fell far below needed levels. Similarly, ning ministries and to making greater use able to maintain the momentum by bor- Niger had utilized only three-quarters of of their capabilities in decision making. 74 Adjustment problems and prospects tamed or turned to inward-look- import prices rise. By contrast, One result of the above analysis of the ing policies (for example, Argen- complicated systems of licensing semi-industrial and primary produc- tina, Brazil, Colombia, Israel, and control can make import ing groups is its suggestion that there Jamaica, Kenya, Mexico, Morocco, substitutes virtually nontradeable was only a weak association between Peru, Portugal, Turkey, Yugo- in inward-oriented countries. the magnitude of external shocks in slavia, Zambia), they were able to: Imports are generally limited to 1974-78 and response in terms of expand both export market essential material inputs and economic growth rates after 1973, rela- penetration and import substitu- machinery for which domes- tive to 1963-73. This does not mean tion and tically produced substitutes are the shocks were unimportant; difficult to find. eventually reduce reliance on rather, their effect for these coun- additional external financing. Fur- tries depended significantly on EXTERNAL FINANCING AND thermore, the outward-oriented the trading environment and economies were characterized by DOMESTIC SAVING. Outward- international capital flows, on an improved savings performance oriented economies used external internal developments and as well as increasingly efficient use financing to cover increases in the domestic management, as well as of investment. (This was true of a prices of imports until they were on underlying structure. A num- number of the inward-oriented able to pay for them with ber of middle-income countries economies as well.) increased exports. Finance bor- were able to borrow commercial rowed at the beginning of 1974-78 capital extensively and expand was invested productively. In all EXPORT MARKET PENETRATION. these countries, most of the extra exports in the 1970s. The main The superior export performance policy issue they face in the 1980s investment needed to effect ad- of outward-oriented economies is justment was financed by is how far they need to modify not unexpected. It is not only a their development strategy to deal increased domestic saving, and matter of competitive exchange their strong export performance with the changing international rates, a unified system of incen- environment. meant that debt-service ratios rose A more turbulent world econ- tives and access to duty-free only slightly. By contrast, reliance imported inputs for exporting on external borrowing was signifi- omy leads an oil-importing devel- oping country to consider two firms. Just as important, pro- cantly greater in the inward-look- ducers are acutely aware of the vir- ing group that did not undertake kinds of strategic changes. The tues of quality control and prompt structural adjustment. first is to adopt a more outward- delivery and have experience in oriented stance, to make products changing product composition in POLICY LESSONS. Outward- in which the country has a com- response to shifts in foreign de- oriented economies have a higher parative advantage and to allow mand. The box on South Korea proportion of trade in GNP than imports to compete with all but a illustrates the impetus provided countries following an inward- limited range of domestically pro- duced goods. The second is to aim by a national commitment to looking strategy. External shocks export-led growth. inflicted upon them a larger loss in for greater self-sufficiency in a wider range of goods and to relation to GNP. But their eco- reduce trading links with the rest IMPORT SUBSTITUTION. The rea- nomic performance is less of the world over and above what son outward-oriented economies damaged by external shocks and is dictated by comparative advan- as a group are also more success- ultimately is less dependent on tage, in the hope of lessening ful than the inward-oriented foreign finance. They may have to vulnerability to external shocks. group in substituting for imports accept some temporary loss of The record shows that as a is that they ensure equal incentives growth momentum during whole the group of countries opt- to production for export and home adjustment while they boost ing for the first course (for exam- markets. Domestic production exports, restrain imports and ple, Chile, Ivory Coast, Philip- must therefore compete with attempt to control imported infla- pines, Singapore, South Korea, imports which, under an out- tion. But growth can be expected Thailand, Tunisia, Uruguay) ward-oriented strategy, usually to pick up, because their form of managed to effect adjustment extend all the way from raw adjustment need not usually with only a temporary interrup- materials to final consumer goods. involve deflationary cuts for any tion in growth. Compared with This can allow considerable scope length of time. This is perhaps the the group of economies that main- for import substitution when most valuable lesson of the ad- 75 justment experience of semi- industrial and primary producing The Philippines countries. Philippines A change in political conditions in the It follows that countries trying early 1970s was accompanied by a switch Terms of trade, 1970-79 to cope with external disturbances in economic policy toward greater out- 11971-73 = 100) in the 1980s should move toward ward orientation Public infrastructural 130 policies that provide equal en- investment was stepped up, while family couragement to export and do- planning programs and partial land 120 reform started to tackle the country's mestic production, and adequate population growth and heavy depen- 110 incentives for savinga conclu- dence on imported food. sion that would, however, need The economy ran into external 100 / qualification if there were to be a difficulties after 1973, when its export marked deterioration in the inter- markets became less buoyant and the price of imported oil rose sharply. The national trading and financial terms of trade declined by 36 percent be- 80 environment. It is important that tween 1973 and 1976 (see figure). Export 70 funds borrowed abroad be volume fell by 11 percent in 1974 but applied toward productive invest- recovered quickly in 1975 and 1976, with 1970 71 72 73 74 75 76 77 78 79 ments which enhance the coun- substantial gains in market shares being recorded in nontraditional primary as try's capacity to produce exports well as in manufactured exports. The tional Monetary Fund (IMF) amounting and curb imports. For this reason, to about $266 million for the period government's commitment to growth led 1976-78. The principal quantitative the uses to which external finance to continued expansion of domestic targets of the extended arrangement pro- are put require careful monitor- demand, a high investment-to-GDP ratio, gram were an average annual GNP ing. (The box on managing wind- larger imports and an increasing current growth of 7 percent; an annual inflation account deficit (see figure). fall gains is again relevant.) This The Philippines then negotiated an rate of not more than 7 percent; and a will be helped by more careful reduction of the current account deficit extended arrangement with the Interna from 6 percent of GNP in 1975 to 4 percent project selection, especially where by 1978. Toward these ends, the program investments involve intensive Philippines envisaged various structural changes and energy and foreign exchange use. Export and import volumes policy adjustments including (1) an Such domestic policy reform is (2963 - 100) increase in the ratio of domestic fixed 300 not easy. It takes time before investment to GNP with a shift in the investment pattern in favor of infrastruc- moves toward a more symmetric ture, the energy sector, and export- 250 system of incentives to exports oriented and labor-intensive industries; and domestic production begin to (2) an increase in the ratio of domestic elicit a larger supply of exports. 200 savings to GNP, partly through a strong Increased savings will not mate- tax effort; and (3) effective demand management policies. Most of the princi- rialize unless there is general con- pal targets were broadly attained. Prices 150 fidence in the authorities' ability of electricity, transportation and gasoline to manage the economy. This were increased; tariffs were lowered and illustrates two things. First, it is 100 Av. 1963 70 71 72 73 74 75 76 77 76 79 domestic credit and external borrowing important to persist with the 69 were effectively controlled. Domestic sav- Current account and components ings rose from 20 percent of GDP in above policies even in the face of Billions of dollars, Current 7Y1CO5 1963-73 to 25 percent in 1978 (see figure); possible short-term setbacks. and exports of labor-intensive industries Second, policy reform will usually increased at 40 percent per annum. Dur- need to be supported during a ing 1976-78 the Philippines purchased an transitional period, as in the additional amount of about $206 million .5 under the compensatory, oil, and buffer Philippines and Uruguay (see stock financing facilities of the IMF. boxes), by substantial external The external position deteriorated 1,0 financing. again with the second large increase in oil Borrowed foreign exchange in prices in 1979. Although a recovery in the 1,5 prices of some primary commodities con- support of a liberalization pro- tributed to a large increase in nominal gram can provide essential inputs 20 export earnings, the current account for export industries. It can also Ax. 1963 70 69 71 72 75 74 75 76 77 78 79 deficit widened to $1.6 billion (5.4 percent finance a flow of imports to mod- of GNP) in 1979 and an estimated $2.2 erate inflationary pressures. Infla- 76 billion (or 5.8 percent ot GNP) in 1980. Uruguay The recessionary effects of deteriorating Uruguay terms of trade led to a slowdown in GNP In a number of respectshealth and life expectancy, political representation, Terms of trade, 1970-79 growth from 6.3 percent in 1978 to 5.8 percent in 1979, and an estimated 4.7 per- education levels and an equitable income (1971-73 - 100) cent in 1980. Inflation, which rose to 19 distributionattempts initiated in 140 percent in 1979, has decelerated signifi- Uruguay since the turn of the century to cantly since then despite the govern- establish a European-style welfare state 120 ment's policy of passing through energy had met with considerable success. But price increases. economic performance was marked by 100 Notwithstanding policy improvements inflation, periodic balance of payments of the 1970s, the balance of payments still crises and declining per capita income. 80 reflects a number of underlying structural The burden of supporting social over- rigidities. The country continues to rely heads, and weak import-substituting on traditional commodity exports for industry hampered by minute market 60 more than two-thirds of its foreign size, fell entirely on livestock and agri- exchange earnings, and industry is too culturesectors of natural Uruguayan 40 great a net burden on the balance of pay- comparative advantage. Protectionist, inward-looking policies discriminated op I I I I ments. More than 80 percent of the econ- I 1970 71 72 73 74 75 76 77 78 79 omy's energy is supplied by imported oil, against traditional exporting sectors and which has raised oil's share in total hindered any potential expansion of merchandise imports from less than 12 manufactured exports. Consumption left percent in the early 1970s to over 25 per- little room for modernizing and augment- cent in 1980. While there are no immedi- ing capital. For about 30 years until 1974, unemployment rose, particularly among ate constraints on foreign borrowing, the economy grew very slowly; in the young, and redistributive mecha- deficits of 6 percent of GNP Cannot be 1964-73, GDP growth averaged only 1.2 nisms involved successively smaller financed indefinitely. During the past percent a year (and GDP actually fell by benefits being divided among an expand- year, the government has therefore 1.5 percent a year in 1971-73). ing number of people, Uruguay began to undertaken measures to promote struc- The peaceful political consensus could experience political upheaval, which tural adjustment, in close consultation not survive economic stagnation. As threatened to destroy the social fabric of with the World Bank. These include pro- the country established over several viding further encouragement to the Uruguay decades. rapid growth of manufactured exports, Export and import volumes The changes in the world economy improving the efficiency of industrial (1963 1001 after 1973 had a dramatic effect on investment, and deregulating the finan- 300 Uruguay's external position. Import cial sector to promote greater resource prices doubled, while the prices of beef mobilization. The structural adjustment 250 and wool (the main exports) declined Exports program is expected to reduce the current by 35 percent and 24 percent respectively account deficit toward sustainable levels in 1975. Uruguay was also harmed by the by 1985. agricultural policy of the EEC, which dur- ing the 1970s shifted from being a net beef importer to a substantial exporter. The Philippines: savings and 100 current account, which had run a surplus investment rates, 1963-73 and 1 before 1973, swung into a deficit averag- 1973-79 II I I I J I ing 4.4 percent of GDP in 1974-75 (see An. 1963 70 71 72 73 74 75 76 77 78 79 Percentage of GDP, constant prices 69 figure). To cover that deficit, Uruguay 30 - Current account and components initially relied on foreign borrowing (out- Billions of dollar,, current prices standing debt increased by 35 percent 25 - - Trade balance between 1974 and 1976) and by running down its international reserves. - I Balance on services Rather than attempting to reduce 20 - - I. r iii and transfers . imports, however, the new government which came to power in 1973 decided to 15 - ) Investment Savings 11 If alter development strategy. The economy was gradually opened to international 10 - .2 / Current account balance trade. Most domestic prices were decontrolled, import quotas were elimi- 5 nated and tariffs and other restrictions .3- were progressively reduced. Foreign 0 -.4 I I I I I capital movements were liberalized, and An. Av. Ày. 1963 70 71 72 73 74 75 76 77 78 79 the real exchange rate (the nominal rate 1963-73 1973-79 69 (continued overleaf) 77 Zambia adjusted for changes in Uruguayan rela- Manufactured exports increased Zambia's terms of trade deteriorated by 52 tive to US prices) was devalued by over 20 their share of the international market by percent between 1974 and 1978. From a percent in 1974-77. This stimulus to more than three times between 1973 and peak in 1974, copper prices fell by 40 per- exports was reinforced by rebates, 1978; import substitution played only a cent in 1975, while import prices rose by preferential credits and tax relief for minor role in reducing the trade deficit. an average 16 percent a year. Wars in exporters. Attempts were made to stimu- By 1978 the current deficit had declined to neighboring Angola, Zaire and Zim- late savings and improve the allocation of $127 million, from $189 million in 1975. investible resources through removal of Both investment and saving in- Zambia restrictions on interest rates. creased their shares in GDP (see figure). GDP and GOY per person and terms of The new strategy did not affect all sec- This was accompanied by a rise in the trade, 1970-80 tors of the economy evenly. However, it rates of capital utilization. 1970 dollars 600 led to a number of desired results. Although disbursed debt rose from S GDP growth rose sharply, averaging the equivalent of 12.5 percent of GNP in 3.9 percent a year in 1974-79. Employ- 1973 to 19.9 percent in 1976, it fell to 17.7 500 ment expanded, though real wages may percent by 1978. have fallen somewhat between 1973 and Rising world oil prices increased oil 400 1979. import costs by 40 percent in 1979. Responses have differed considerably 300 from those adopted in 1974. The exchange rate was allowed to appreciate, in real Uruguay: savings and terms, as a means of reducing domestic 200 investment rates, 1963-73 inflation. But unless inflation can be and 1973-78 brought down rapidly enough, this may 100 reduce incentives to exports and import is- Percentage of GDP, constant prices 25 substitution. 1975 In certain respects the Uruguayan 1970 72 74 76 78 80 economy is better placed to cope with an 20- increased deficit than it was in 1973. current account and components Dependence on imported petroleum is Silhio,,s ,f lI,,,,, ru,-,,,,t +1.00 slowly being reduced as hydroelectric 15 capacity expands, and the economy's +0.75 - Balance on eeM,ee and tran:fn: II ability to adjust flexibly to external shocks +0.50 - Savings is not in doubt. Substantial foreign bor- *0.25 - rowing will probably be required in the Investment early 1980s; so debt-service ratios are likely to rise. But if fiscal, credit and tariff 0.25 - policies continue to be coordinated to 0.50 - reduce inflation, and incentives to 0.75 - 'V domestic savings can be increased, Cur,ent account balance Av. Av. Uruguay should be able to consolidate its 1.25 1963-73 1973-78 external position and maintain the 1970 71 72 73 74 75 76 77 78 79 improved growth rates of the 1970s. tion can arise not only from the Although the association be- uted to structural factors. This initial increase in imported oil tween external shocks and eco- highlights the importance of: prices but also from devaluation nomic growth was weak for the policies to promote agricul- (frequently the centerpiece of a sample of middle-income coun- tural and other nonmining ex- liberalization program), which tries analyzed above, it was im- ports; and further raises the domestic cur- portant for some of the poorer financing to ease adjustment rency price of imports. Without and more inflexible primary pro- to external shocks in a mineral external borrowing, governments ducers. The experience of Zambia economy until some diversifica- may avoid domestic policy reform (see box) suggests that a policy of tion has been achieved. for fear of precipitating internal diversifying the economy away unrest and a foreign exchange from mining could probably have Low-income oil importers crisis. In turn, external financing prevented no more than a third of unsupported by policy reform the precipitous fall in national Populous South Asia may simply postpone rather than income from 1974 to 1978. The In common with other low- avert a crisis. other two-thirds could be attrib- income countries, the large, 78 babwe (then Rhodesia) disrupted Zam- increases in official producer prices, have been able to slow the decline in bia's rail links to the coast and increased agricultural prices generally have been incomes after 1974; but it would still have transport costs. In 1979 a serious drought below border equivalents. Government been seriously affected. It might, for :ontributed to a 9 percent fall in agri- support services have been inadequate example, have succeeded in raising its :ultural production. and have deteriorated under budgetary nonmining exports to 20 percent of the Mining dominates Zambia's exports, pressure; state farms, rather than small total by 1974 (implying that their volume accounting for 95 percent of the total; in farmers, have absorbed large resources; would have increased by more than 20 urn, exports make up 40 percent of GDP. marketing arrangements have been cum- percent a year in 1965-74). If these non- [he terms of trade deterioration therefore bersome and wasteful. traditional exports had continued to grow :aused a huge reduction in national Industrial policy has emphasized at 5 percent a year after 1974 and had ncome. Adjusting GDP by the changes in import substitution, although industry is experienced moderately favorable price -he terms of trade produces a figure for largely dependent on imported inputs. movements, and if food imports had been gross domestic income, GDY. Per person, By 1978 industrial inputs accounted for 56 substituted by domestic production, GDY has been falling continuously since percent of total imports. As foreign about one-third of the fall in GDY from [965; the fall accelerated in 1974-78, so exchange became scarcer, they had to be 1974 to 1978 could have been avoided. But GDY per person was less than half of its cutresulting in excess capacity and even with those optimistic assumptions, [965 level (figure). unemployment. two-thirds of the fall was unavoidable Part of this fall was borne by lower The pattern of investment has tended given Zambia's structural dependence on nvestment, but consumption per person to favor projects with long payoff periods, copper. has also declined sharply. Rural house- thus restricting employment and output Higher copper prices in 1979 and an holds, especially those in peripheral benefits in the short and medium term. IMF-supported adjustment program Ireas, have suffered declines in already New investment has been given priority helped reduce inflation, but GOP fell 9 low incomes; there are serious shortages over maintenance and completion of percent. In 1980 preliminary indications ,f basic consumer goods, as well as ongoing projects, resulting in high costs, suggest that it grew only 1 percent. edicines, drugs, school equipment, and bottlenecks and low returns. The level of Future growth requires the allocation of transport; and child health and nutrition urban real wages has discouraged labor- more foreign exchange to mining in the have probably deteriorated. One indica- intensive activities. near term and greater emphasis on diver- tion of this is the spread of scabies, a Despite two devaluations since 1975, sification as well as some basic reforms of Jisease associated with unhygienic the real exchange rate (the nominal rate institutions and economic policies for the :onditions, reported cases of which adjusted for changes in Zambian relative longer term. Zambia's structural inflex- ncreased eighteenfold in 1973-78. In to world prices) appreciated by about 25 ibility will take many years to overcome, rban areas, wage employment and real percent from 1974 to 1979. In conjunction and meanwhile the country will remain sages have fallen and expenditure on with the protection conferred by tariffs vulnerable to terms of trade fluctuations. :ommunity services has been cut. and import controls, this has discouraged Adjustment will therefore be hard to Since independence in 1964, the nonmining exports. accomplish without balance of payments Iovernment has had only limited success Administered prices have com- support (in part provided by an IMF n diversifying the economy away from pressed parastatal revenues and led to Extended Fund Facility of $1,040 million, Tuning. heavy subsidization. Between 1965 and approved in May 1981), with special atten- Agriculture, in which Zambia has 1973, government spending, including tion given to safeguarding the position of ibundant potential, has been neglected. subsidies, rose almost twice as fast as the poor. [he rural-urban terms of trade have revenues. ihifted against agriculture. Despite With different policies, Zambia would densely populated countries of percent a year in the 1970s. Adjustment was helped by three South AsiaBangladesh, India Manufacturing's high share in factors (see box on India, overleaf): and Pakistanare heavily depen- GDP (over 15 percent) and in a strong agricultural per- dent on agriculture in terms of merchandise exports (over 50 per- formance based on the introduc- both GDP and employment. But cent) makes these countries tion of high-yielding seed varieties India and Pakistan, in contrast to almost semi-industrial in struc- combined with fertilizer and many sub-Saharan African coun- ture and gives them a range of irrigation (this reduced the need tries, have large, diversified adjustment options wider than for food imports); manufacturing industries and those available to other compara- workers' remittances from enormous numbers of skilled peo- bly poor countries. the capital-surplus oil-exporting ple. Manufacturing output has It will be recalled that populous countries; and grown at just under 5 percent a South Asia is the only country an increasing level of aid. year over the past two decades in group for which the export Growth, which had averaged India; in Pakistan it grew at nearly shortfall was significantly less around 3.5 percent in the decade 10 percent in the 1960s but only 4 important than price effects. 1963-73 for this group of coun- 79 India GNP grew by an average 3.4 percent a imports. It also received the benefits of: year in 1964-73; it then accelerated to 4.3 India Migrants' remittances. In the percent a year in 1974-79, despite the mid-1970s, the number of Indian workers Terms of trade, 1970-79 sharp rise in oil prices. This considerable in the Gulf states increased considerably. (1971-73 = 100) achievement can be attributed to both Their annual remittances rose from less short- and long-term factors. The most 120 than $250 million in 1974 to an estimated significant change was in: $2.4 billion in 1980. Agriculture. In the past four years, 110 The combination of increased remit- India has imported hardly any food- tances and savings on grain imports grains, and built its stocks up to unprece- allowed India to run a current account dented levels (see figure). As a result surplus in the three years 1976-77 to 1978-79 (see figure). As a result, India's foreign exchange reserves rose to a peak India of over $7 billion in 1979. By 1977 the Export and import volumes government was able to take advantage of (1963 = 100) this situation by relaxing some import 200 restrictions on: Industry. India's policy of import 0 I I I I I I I 1970 71 72 73 74 75 76 77 78 79 substitution has produced a diversified 175 industrial base. Investment has risen substantially and has been financed by Eupnrts 150 India was able to manage the conse- Imports quences of a severe drought in 1979 125 without resorting to significant foodgrain India: foodgrain production, imports. Over the 1970s as a whole, imports and stocks, 1955-81 loot foodgrain production rose at an average Millions of metric tons Av. 1963 70 -69 71 72 73 74 75 76 77 78 79 of almost 3 percent a year, compared with 140 population growth of 2.2 percent a year. 130 Current account and components While the weather is still a major factor BillIon, of dollar.,, Current prices 120 +2 in Indian agriculture, the spread of irriga- tion and modern farming techniques has 110 +1.5 - Current account balance- provided greater security. So far the big- 101) gest difference has occurred in wheat 90 +1 - farming in the north-western states of Balance on services Punjab, Haryana, Uttar Pradesh and 80 +.5 - and transfers spreading eastward into West Bengal. But Trade balance 70 fertilizer use and high-yielding varieties 60 Closing stocks u of seeds are starting to affect rice as well, J Imports 'III I I and this has particular relevance for some of the poorest states in the east and south 10 0 of the country. -1 - By virtually ending foodgrain imports, 1955 60 65 70 75 80 81 Ày. 1963 70 71 72 73 74 75 76 77 78 79 India has saved substantial amounts of Agricultural year ending June 30. -69 foreign exchange, helping it to pay for Estimates for 19s0 and 1981. more expensive oil without curbing other tries, was boosted by a buoyant put has failed to keep pace with economic difficulties were aggra- agricultural sector to roughly 4.2 the needs of a population growing vated by political instability. Few percent during 1973-79. at 3 percent a year. The conse- measures to promote structural Bangladesh has fewer adjust- quent cost of importing food- adjustment were taken; the coun- ment options than India and grains at rising international try relied mostly on external aid Pakistan. It is classified by the prices was part of the external and on workers' remittances, United Nations as one of the least shock, and accounted for 40 per- which were second only to jute as developed countries. Since inde- cent of merchandise imports in a source of foreign exchange. The pendence in 1971, agricultural out- the mid-1970s. During that time, government has recently taken 80 While this is a difficult situation, there is some room for optimism. lomestic savings for most of the past 20 The response of India's export ment and will not be subject to prevailing Tears. Yet in industry at least, extra invest- laws on foreign participation. As for volumes in attaining a growth rate nent has not produced more rapid infrastructure, the Sixth Plan (running up of nearly 7 percent between rowth. Since the mid-1960s, industrial to 1985) provides for much increased 1975-76 and 1978-79, following a ;rowth has slowed (see figure). This can investment in coal, power and railways. measure of trade liberalization, e attributed partly to a sluggish rise in In the short term, these changes can do indicates that its manufacturing domestic demand and the fact that Indian little to ease the scarcity of foreign industry has benefited little from the exchange that has developed in 1980 and industry has the potential of com- cale economies of exporting to world 1981. Almost 45 percent of India's import plementing an increasingly narkets. In addition, industrial licensing bill in 1980-81 was accounted for by oil. buoyant agricultural sector in rais- ias restricted the entry of new firms into Migrant remittances are unlikely to grow ing exports, restraining imports ome industries and, in others, limited as rapidly as they did in the 1970s. Nor is and effecting flexible adjustment the expansion of existing firms. But a aid, which played an important role in nore significant cause has been supply to external shocks. onstraints at home, in particular: Least developed countries Infrastructure. During the 1970s power shortages have become chronic. India: industrial production, Foremost among the issues affect- hey are less the result of inadequate 1947-80 ing least developed countries apacity than of the poor performance of xisting capacity, itself due to input short- Annual average percentage growth (mainly in sub-Saharan Africa, ages compounded by maintenance and 10 Table 6.1) is the difficulty of nanagement failures. On government 8 separating questions of adjust- estimates, electricity shortfalls averaged ment from those of overall 12 percent a year between 1975 and 1980. development. Their productive As a direct result, GDP may have been cut by 2 percent a year. sectors are weak and inflexible. The power industry has also been hit They lack the skills, the infrastruc- by shortages of coal. In the three years ture and the commercial and 1977-78 to 1979-80, coal production stag- financial institutions to adjust tated although it picked up again in rapidly to external shocks. Most of 1980-81. Constraints on railway operation 1947 51 55 60 65 70 76 them rely heavily on a few crops through such factors as labor disputes 55 60 and power shortages have also restricted 51 65 70 76 80 for their export earnings: the three the movement of coal that was produced. most important commodities Failings in these three infrastructural cor- account for more than 80 percent nerstonescoal, power and transport cushioning the balance of payments after of total exports in Burundi, the have all been interconnected. the 1973-74 oil-price increases. India is Official policy aims to correct all these therefore facing a more demanding Gambia and Uganda. They are domestic constraints. Licensing require- adjustment than before. Nevertheless, if poor countries because they res- ments have been eased, allowing com- it continues its agricultural progress, pond less readily to economic panies in core sectors to expand their adopts more outward-looking trade opportunities; they do not res- capacity by 5 percent a year for five years. policies, improves the infrastructural pond because they are poor. There Export production has been exempted support for its industry, and continues to from licensing restrictions for all units, receive external support for its develop- are vicious circles of poverty while units exporting all their output will ment effort, India should be able to throughout the developing world, be exempt from all import controls and restore its external position without but they are drawn tightest of all duties, will receive favorable tax treat- seriously slowing down its growth. around the least developed coun- tries. It will be recalled from Table 6.2 that export volume shortfalls aris- steps to switch resources into countries. Oil imports (net of re- ing from slow growth in the agriculture, especially in low-cost, exports of petroleum products) markets for primary products quick-gestating irrigation projects were 11 and 13 percent respec- were 10 times as important as price and has introduced some incen- tively of the total imports of effects for the least developed tives to encourage exports. Bangladesh and Pakistan in 1978; countries. But well over twice as The 1979-80 oil-price rise, com- their share has increased over one- important as the external shock ing on top of the 1979 monsoon and-a-half times in India's case, was the decline in their export failure, has worsened the external rising from 24 percent to over 40 market shares, which was caused position of South Asia's largest percent. by domestic failures, particularly 81 in agriculture. This has been due number of countries. The subse- exports. One significant source of partly to the lack of research quent fall in commodity prices in discrimination against agricultural adapting farming methods to 1978 and the 1979-80 round of oil- production and exports has been Africa's varied soil and climate, price increases leave sub-Saharan the attempt to industrialize and partly to the shortage of Africa in the throes of a severe behind overvalued exchange trained personnel to implement economic and financial crisis. A rates. The appeal of this strategy what is already known. But there number of debt reschedulings are derives partly from the fact that were also other reasons. By keep- currently underway. Others may the alternativedevelopment ing agricultural prices low, gov- well follow, as extensive arrears in through primary production and ernments have tapped agricul- payments have accumulated in the gradual diversification of tural surpluses to finance the several countries. exportswas associated with col- provision of cheap food and other onialism; and partly because it benefits for urban populations. Adjustment problems and appeared to offer an avenue to prospects The situation has been exacer- rapid industrialization as an insur- bated by inefficient arrangements Agricultural performance has ance against low and unpredicta- for the delivery of inputs to and been the key feature distinguish- ble commodity prices. the marketing of produce from the ing the growth record in populous Past experience points to agricultural sector. In a number of South Asia from that in the different conclusions. Table 6.2 countries, drought, wars and civil poorest countries of sub-Saharan has shown that, for lowest-income strife have also taken their toll. Africa. India's considerable sub-Saharan Africa, supply side The neglect of agriculture has progress in raising agricultural constraints to expanding export led to increasing reliance on food productivity has made it virtually market shares were far more imports and on foreign aid to self-sufficient in foodgrains. important than adverse external finance those imports. Combined Throughout South Asia, there is shocks. Furthermore, countries with weak export performance, it much still to be done to improve such as Ivory Coast, Malawi and, has also forced countries such as agricultural yields; but the poten- in the 1960s, Kenya, which limited Sudan and Tanzania to compress tial has already been demon- discrimination against primary imports to the point where any strated, the means of fulfilling it production and exports, were able further reduction would depress are already known. to expand export volumes and current incomes as well as seri- In manufacturing too, South increase their purchasing power ously jeopardize the prospects for Asia has considerable scope for significantly. Agriculture in all export expansion and economic expanding output and exports. these countries responded well to growth. The case study on India (see box) prices and other incentives; with The growth record of the least has identified bottlenecks in basic the right encouragement, and developed countries of sub- infrastructure as being among the given time, it can turn to advan- Saharan Africa has been dis- constraints inhibiting manufac- tage such opportunities as are pro- couraging. After averaging about turing production and exports. vided by the international envi- 3.5 percent a year in 1963-73, GNP Such obstacles to extra production ronment. growth slowed to nearly 3 percent of tradeabies have to be sur- The potentially important a year in 1970-73 and did not mountednot least through a role of the agricultural sector in improve in 1973-79. Through- combination of external financing effecting adjustment and the out, population grew at well over 2 and domestic savings to augment drain on current surpluses caused percent a year, leading to a decline capacity in non tradeables, for exam- by present policies should prompt in average incomes for several ple, power and transportation. governments in sub-Saharan countries. This cannot be accomplished by Africa to consider reforms that External shocks, while not a short- to medium-term loans cover exchange rates, internal major problem in the mid-1970s, designed to provide balance-of- pricing and public sector subsidies hit the economies of sub-Saharan payments support. The situation as a matter of priority. They will Africa particularly hard toward exemplifies a general principle: encounter opposition from the end of the decade. The pri- low-income coun tries require ion g- powerful vested interests. But the mary commodity boom of 1976-77 term external finance for adjustment. inefficiencies associated with cur- led to substantially increased For sub-Saharan Africa, the rent policies can hardly be toler- foreign borrowing on hard terms policy priority is to promote ated in a decade when external and rising public spending in a agriculture and agricultural shocks will probably be no less 82 Tanzania agricultural prices (particularly for food Tanzania crops), restricting credit, increasing taxes, Tanzania's current economic position is and controlling imports more strictly precarious. Already one of the world's Terms of trade, 1970-79 while continuing to expand social pro- poorest countries, its GDP per person fell (1971-73 = 1001 grams (especially in education and by nearly 5 percent in 1980, and it now health) and increasing the minimum faces an external financial crisis. The real 150 wage. The shilling was devalued in 1975. value of imports in 1980 was below its 1973 Public investment was curtailed in 140 level despite a 150 percent real rise in 1975-76. gross disbursements of external aid. In 130 The program was carried out in a spirit 1980 oil imports absorbed 40 percent of of sacrifice and austerity. Increased aid total export earnings, drought-related 120 (on concessional terms), some use of foodgrain imports a further 20 percent reserves, and borrowing from the IMF and debt service another 9 percent. By the 110 helped cover the external shortfall in 1974 100 and 1975. In 1976 and 1977 the current account deficit was reduced (see figure), 90 largely as a result of improved export Tanzania prices, particularly for coffee. But by 1978, Export and import volumes difficulties resumed. Export prices and 1970 71 72 73 74 75 76 77 78 79 (1963 = 1110) volumes fell, war broke out with Uganda, 200 the effects of the break-up of the East 175 African Community made themselves felt, and adverse weather affected food 150 end of 1980 net reserves were negative, output. 125 - Imports and external payment arrears had While there was temporary success in reached $286 million, half the value of reducing food imports, the adjustment merchandise exports. effort in the 1970s failed to revive the pro- Nevertheless, there is much that can be (con tin ued over1ea done to maintain Tanzania's economic 50 and social gains, provided that appropri- Tanzania: savings and 25 - ate policies are adopted and additional investment rates, 1963-73 aid is forthcoming. In deciding on and 1973-79 0) I 1970 71 72 73 74 75 76 77 78 79 "appropriate" policies, one of the critical issues is the extent to which adjustment Percentage of GDP, constant prices Current account and components conflicts with Tanzania's economic and 25 Billions of dollars, current prices +2 social priorities. They emphasize a self- Balance on services and transfers Trade balancn reliant socialist society and rural develop- +1 - 20 - - Investment ment based on li/anna, a form of informal B - ! p cooperative production. Those objectives 1- have guided Tanzania's past efforts to 15 - achieve adjustment although in practice -2 - Tanzania has become more dependent on -3 - outside assistance, and rural develop- 10- Investment 4- ment has been neglected. In 1974-75, Tanzania faced a marked Savings1 - deterioration in its external position, savings 6- 5- caused in part by higher oil prices, but 7- more seriously by drought-induced food -8 I I I I I I I I I imports (at peak international prices) and 0 Av. Av. 1970 71 72 73 74 75 76 77 78 79 a drastic fall in export volumes. The 1963-73 1973-79 government responded by increasing significant than they were in can achieve in the poorest coun- Zambia and Tanzania, see boxes) 1979-80. tries, particularly in the short run. could improve growth rates by as External assistance and domes- And the role of external assistance much as 2 percent throughout the tic policy reform can and should in fostering adjustment without 1980sfrom 2.4 to 4.2 percent in be mutually reinforcing. The excessive cuts in growth cannot the Low case, and from 3.0 to 5.0 urgent need for policy reform be underestimated. For oil-import- percent in the High case (Chapter must be tempered by a recogni- ing African countries as a whole, 2). But such policy reform is tion of what domestic policy alone policy reform (exemplified by unlikely in the conditions of fall- 83 ductive and monetized sectors or to little scope for further trade adjustment, reverse the secular decline in export Upper Volta given the concentration of Upper Volta's volumes that began in the early 1970s. Upper Volta, a landlocked country in the exports on primary products and the fact In part, structural weaknesseslow center of West Africa, is one of the poorest that imports cannot be reduced without productivity, lack of maintenance, countries in the world. Its GNP per per- cutting growth. The prospects therefore undeveloped infrastructure, manpower son was $180 in 1979. It lacks most of the continue to depend on aid and remit- constraintslimited the effectiveness human and physical resources needed to tances. But the aid outlook is deteriorat- of efforts to increase production in the promote development. Its literacy rate ing (partly because of frustration with the short term. But several other factors, was only 5 percent in 1972, compared limited results achieved so far); and remit- more susceptible to government con- with an average of 39 percent for low- tances may not rise so fast, as more trol, also prevented adjustment income countries in 1976; many of its bet- Voltaics settle permanently in other coun- measures taking full effect: ter-educated, younger people emigrate. tries. On almost any set of assumptions, Institutional transformationmost Agriculture constitutes a livelihood for Upper Volta faces abject poverty for notably, the nationwide "villagization" over 80 percent of the population, and decades to come. campaign, the replacement of coopera- accounts for 40 percent of GDP and 90 Two priorities stand out: tives by parastatals and the overlapping percent of total exports. Yet the soil is A substantial increase in agricultural responsibilities of party and govern- poor and heavily eroded. Rainfall is productivity. Any program must include ment agencieschanged course unreliable. The country's few mineral increased agricultural research, to adapt several times and disrupted agriculture deposits (primarily manganese and rock and apply the findings of crop research to for much longer than expected. phosphates) are expensive to exploit. local conditions. At present, modern Producer prices for export crops fell Given these overwhelming constraints, agricultural techniques can be applied by almost one-third in real terms, com- the scope for adjustment to changed economically to only a few crops in the pletely wiping out any potential benefit external circumstances is very limited. more favored ecological areas. The from the 1975 devaluation. Government policies have been generally development of improved cultivation Setting investment plans at levels conducive to development; investment practices should aim at increasing the that eventually proved unsustainable has increased, as has the share of imports efficiency of food production and con- meant that many projects were imple- in GDP (from 21 percent in 1970 to 40 serving scarce soil and water, particularly mented slowly and remained un- percent in 1977). The expansion of invest- on the central plateau where population completed for extended periods. Mainte- ment and imports has been made possi- pressure is most intense. nance budgets were underfinanced. ble largely by substantial concessional Human development. Investment in Pervasive government controls aid, by workers' remittances and, to a basic education and primary health care during periods of shortages led to lesser extent, by rising export earnings. would have major economic as well as expanding unofficial markets and Yet GNP growth has only marginally ex- social returns over the long term. But the smuggling and eliminated producer ceeded population growth over the past government's ability to meet operating incentives. two decades. costs is overstretched even by the low Of the factors inhibiting adjustment, The external position has tightened level of services already provided. There none need require revisions which con- somewhat in 1979-81, reflecting higher is relatively little potential for increasing flict with Tanzania's development petroleum prices and a deterioration in coverage by reallocating spending or objectives. However, some changes in the terms of trade. Imports were reduced redesigning existing services. So a pro- strategy are urgently needed. Greater by 13 percent in 1979 under a stabilization gram on the scale needed would involve a willingness to permit markets to func- program supported by the IMF. There is massive infusion of foreign aid. tion is not incompatible with ujamaa; neither is the recognition that some state controls may be self-defeating while skilled manpower is limited. Con- are so limited by physical and because of the higher cost of pri- tinuing external support for Tanzania, especially for food aid and to finance economic disadvantages that they vate capital, the dimmer prospects the operating costs of social programs, will continue to depend heavily for concessional assistance and a would facilitate adjustment. It would also on aid for the foreseeable future more modest rate of increase in lessen the conflictto the extent that one (see box, Upper Volta). workers' remittances. There are existsbetween growth and equity. nonetheless many similarities Implications between the two episodes, Adjustment to the 80 percent real especially in the nature of external ing per capita income implied by increase in petroleum prices in shocks confronting the develop- the Low case. The combination of 1979-80 and the concomitant ing world. This should make the policy reform and High case levels recession in industrial countries is lessons learned from the present of assistance could together im- beginning to get under way. The study of 1974-78 experience par- prove Africa's growth prospects adjustment options of the oil- ticularly valuable in shaping dramatically. But these are coun- importing developing countries adjustment policies which can tries where, even under satisfac- are currently more constrained promote growth with equity in the tory policies, growth prospects than they were in the mid-1970s, 1980s. 84 China: adjustment and reform Development efforts in China accounts for 34 percent of GDP 64 years) outstandingly high for a have consistently been directed and over 70 percent of employ- country at China's per capita toward two main objectives: first, mentsimilar to the average for income level (see box on poverty industrialization, and in particular low-income countries. Around 85 and human development in development of a heavy industrial percent of the population, more- China, page 101). base; second, elimination of the over, lives in rural areas. worst aspects of poverty. Chinese Per capita GNP (when adjusted The need for adjustment development strategy has also to allow for the unusual structure been shaped by two major con- of prices in China) appears to have China's economic policies have straints: an extreme shortage of grown at an annual rate of 2.5 to been altered considerably in the cultivable land in relation to 3.0 percent in 1957-79. This rate is past few years, with the formula- population and a high degree of significantly above the average for tion of a program of "reform, international isolation. other low-income developing adjustment, consolidation and The Chinese response to these countries (1.6 percent in 1960-79) improvement." Its two main fea- constraints has been to approach though well below the average tures are reform of the system of the two objectives in two different for middle-income developing economic management, including ways. Following an initial phase of countries (3.8 percent), and has greater reliance on market forces, property redistribution, poverty not been high enough to pull and a shift in emphasis from reduction mainly through rural China out of the low-income investment to consumption. development and the provision of group. A high rate of domestic sav- Though partly the result of basic social serviceshas been ings (at 1970 prices, the marginal political change, the new policies based largely on local resources savings rate in 1957-79 was over 40 have been motivated also by some and initiative, with a strong em- percent) has facilitated the rapid important underlying economic phasis on economy and technical pace of industrialization, but has considerations. In the past, the improvisation. Communes, at the same time caused consump- expansion of output has been which form the basic units of the tion to grow significantly slower based on massive mobilization of rural economy, have also than income. resources and fundamental insti- established some industries in Nonetheless, China's most tutional change. Further progress, rural areas. But industrialization remarkable achievement during however, will have to be more has been based mainly on a mas- the past three decades has been to dependent on increased efficiency sive infusion of centrally make low-income groups far bet- of resource use. In addition, the mobilized resources, with less ter off in terms of basic needs than benefits of technological isolation concern for cost effectiveness, and their counterparts in most other as a stimulus to improvisation using technology largely de- poor countries. They all have have been overtaken by its costs in scended from Soviet designs of work; their food supply is guaran- terms of backwardness and bot- the 1950s. teed through a mixture of state tlenecks. And the remarkable Tension between these two rationing and collective self- progress made in industrialization approaches has contributed to insurance; most of their children and in meeting basic needs has not sharp policy oscillations. Never- are not only at school but are also been matched byand has cre- theless, there has been substantial being comparatively well taught; ated a demand fora commen- progress toward the two main and the great majority have access surately rapid rise in general liv- objectives. The share of industry to basic health care and family ing standards. in GDP (around 40 percent) is cur- planning services. Life expec- rently similar to the average for tancywhose dependence on Prospects and options in the 1980s middle-income developing coun- many other economic and social tries. But because the share of variables makes it probably the Although slow population services is much smaller than in best single indicator of the extent growth, better access to foreign other countries, agriculture still of real poverty in a countryis (at markets and technology, and 85 system reform have all improved improved policies and manage- cent of total commercial energy) China's economic prospects, ment. Especially important is the are brighter; but output growth in especially in the longer term, the government's present emphasis the 1980s will be slower than in the government's drive to improve liv- on stronger incentives and more past, even if high priority is given ing standards will in the coming producer autonomy, on greater to the sector. decade be subject to a set of specialization of output mix in line Total primary energy produc- interlocking constraints. Some of with local comparative advantage tion in the 1980s will thus not grow these are of long standingagri- and on agricultural research. much faster than 2.8 percent per cultural land, foreign exchange, Measures to increase agricul- year, with the growth rate in trained manpower. Others are tural efficiency, growth of com- 1980-85 unlikely to exceed 2.2 per- more recentdomestic energy mune industry, and even in- centless than one-quarter of the production and financial re- creased agricultural prices will do 1952-80 growth rate. sources for new investments least for the rural poor (since The energy sector is already (which are being squeezed be- many communes are net pur- absorbing over 40 percent of tween the government's desire to chasers of food). To counteract industrial investment. The addi- reduce the savings rate and the a possible increase in rural in- tional capital outlays that would claims of an enormous existing equality, increased state support be required in the first half of the investment program). for poor areas is needed to pro- decade to further accelerate the The scope for improving eco- mote the development of agricul- growth of energy output in the nomic performance is particularly ture and nonagricultural activ- second half, even if feasible in great in industry and energy. ities, and to provide more food terms of specialized manpower In terms of international trade, and better social services. This, and equipment, would be so large outward-looking policies should like general increases in agricul- as to crowd out vital investment promote a significant expansion tural prices, could be financed in in other sectors. Prospects for of exports. In the short- and part by progressive taxation of economic growth in the 1980s thus medium-term, China could bor- agricultural income or land. And depend critically on reducing row substantial amounts of in cases where it would be cheaper energy use per unit of output. foreign exchange to ease the tran- than raising their incomes on the This is doubly important in the sition to a restructured economy. spot, the rural poor should grad- case of oil, whose availability for ually be allowed to move to other use as an industrial raw material Agriculture areas. In addition, they might will also fundamentally influence The problems facing agriculture in benefit from long-term regional growth prospects. the 1980s are similar to those in the development plans: these could past. On the demand side, food- address the special problems of Industrial energy conservation grain production and food secu- particular localities, focus money Because agriculture, commerce, rity will continue to require high and manpower on them and pro- households and transport are priority. But competition for land mote coordination among dif- lesser users of energy, with will be sharpened by the new ferent government agencies. relatively limited scope for conser- emphasis on raising living stan- vation and interfuel substitution, dards, which will require Energy production the outcome will turn mainly on relatively greater supplies of both The outlook for domestic energy what is achieved by industry higher quality foods and production has recently deterior- (including the energy sector agricultural raw materials for light ated. Oil output peaked in 1979 at itself). Altering the balance be- industry. 2.12 million barrels a day and is tween heavy and light industry in As regards supply, the amount likely to fall to about 2 million bar- favor of the latter has already con- of land per worker has shrunk, rels a day in 1985, with little pros- tributed to a significant reduction and some of the factors that have pect of an increase in the latter in energy use and will continue to raised yields so remarkably in the half of the decade. To prevent an do so until the middle of the pastirrigation, fertilizer and even larger decline, immediate decade. Thereafter, heavy indus- changes in cropping patterns steps have to be taken to improve try cannot grow much more are unlikely to help so much in the reservoir engineering in existing slowly than light industry, since it future. On the positive side, how- fields and the effectiveness of produces much of the equipment ever, substantial gains will prob- exploration. The prospects for coal and materials for light industry, ably be realized through (which contributes about 70 per- agriculture and the service sectors. 86 Of greater and more enduring materials and oil will remain whether, when and how to pur- importance, therefore, will be cuts tightly constrained, increased chase technology from abroad. in energy use and substitution of imports are desirable. Foreign borrowing coal for oil within industrial sub- Economy in the use of industrial sectors. In this regard, the bulk of capital will be essential if sus- China's oil exports will decline in the large potential for energy sav- tained rapid growth is to be recon- volume, and could disappear by ings is in heavy industry. ciled with a reduced aggregate the end of the decade. Slow Substantial savings could be investment rate and higher invest- agricultural growth will restrict obtained at negligible cost by ment in nonproductive sectors. primary export expansion to at minor operational improvements. As with energy, a significant best 4 to 5 percent a year. Thus Further savings, and substitution reduction in the use of capital per manufactured exports will have a of coal for oil, could be achieved at unit of output can be expected critical influence on the growth moderate cost by limited equip- from the shift in emphasis from rate of foreign exchange earnings. ment and technology improve- heavy to light industry, as well as The need for imports will be ments. Beyond that, major from the reforms in economic great. Substantial imports of raw changes in some processes are management. materials will be required to main- called for. In certain industries Given the shortage of foreign tain a rapid rate of industrial (most notably metallurgy), it will exchange, and the knowledge to growth. Pressure to increase con- be both desirable and feasible to be gained from exposure to world sumption and constraints on eliminate most small plants. markets, expansion of manufac- agricultural production are These measures could very tured exports must have high unlikely to permit any reduction substantially reduce energy use priority. The outlook is promising, of food imports. And a well- per unit of industrial output, at a given the abundance of skilled chosen program of capital goods capital cost far less than that of low-wage labor and the enormous imports could make a major con- achieving an equivalent increase potential for economies of scale. tribution to modernization and in energy supply. But to accom- At present, three-fifths of the easing of constraints on plish this will require thorough China's manufactured exports growth in many sectors. advance planning in each of the consist of products other than Provided the debt-service ratio major subsectors, and the integra- machinery or equipment sold to (which is low at present) can be tion of energy conservation with developing countries or the non- kept within manageable bounds, other aspects of industrial restruc- market industrial countries. To the main consideration in borrow- turing and modernization. It will achieve rapid growth, China must ing decisions is the value of the also require reform of energy increase its currently very small additional resources obtained in re- allocation procedures. And it share of the richer markets, lation to the real cost of borrowing. would be greatly facilitated by especially in the OECD. Within the past year, the changes in energy prices (espe- On this basis, the volume of government has addressed the cially a large rise in the price of fuel China's manufactured exports relationship between the cost of oil), in conjunction with further could grow in the 1980s at a rate of, foreign borrowing and the returns reforms to increase the incentive about 10 percent a year, and quite to investment, and has cancelled effect of prices on users. possibly 15 percent. In the latter import contracts for several case, the value of manufactured underprepared projects. Looking Other industrial issues exports in 1990 (in the prices of that further ahead, some key determi- Industrial expansion in the next year) could be over $60 billion. nants of the optimal level of few years may be constrained not More generally, the updating of China's foreign borrowing, only by energy, but also by raw industrial technology can produce including the rate of growth of materials, foreign exchange and major gains in productivity and manufactured exports and the finance for new investments. product quality, both in industry efficiency with which capital afid Expansion of light industry is and in the other sectors that use its energy are used, are both ulti- already being held back by short- products. It is being actively pur- mately dependent on reform of ages of raw materialsboth sued in most industrial subsec- the economic system and industrial (petrochemicals and tors. But it could be accelerated improvement of economic appropriate metals) and agri- and made more cost-effective by management. But foreign borrow- cultural. Because the domestic stronger incentives for innova- ing could itself contribute signifi- supply of agricultural raw tion, and by better decisions on cantly to the greater efficiency that 87 is needed to accelerate future the use of energy, materials and rowing needed to attain any given growth. capital, through better policies growth rate. And faster growth and planning, system reform, and would enable more help to be Overview exploitation of opportunities for given to the poor without a slower China faces a difficult transition foreign trade, borrowing and increase in the living standards of period in the 1980s when its technology transfer. other groups. options will be constrained from Policies in the second area have The actual outcome will of several directions. But the govern- so far had mixed results, but their course depend not only on the ment has room for maneuver in success in the future will substan- government's choices and policies two general areas. The first con- tially affect the government's but also on unpredictable factors cerns the choice (via investment freedom of action in the first. such as weather, success in oil decisions) between present and Using capital more efficiently, for prospecting, growth of overseas future consumption, and the example, would ease the tradeoff markets and the availability of allocation of consumption be- between present and future con- foreign capital on concessional tween the poor and other groups. sumption. Energy and material terms. The second concerns the improve- conservation would likewise ment of efficiency, especially in reduce the amount of foreign bor- The oil-exporting countries This section considers the ter in having been net importers of management occasioned by the problems and prospects of two capital in recent years and being windfalls they received after the groups of oil exporters, capital- likely to need foreign capital in the price increases of the 1970s. deficit and capital-surplus.1 Both future. The quadrupling of crude oil groups raised their GNP growth Nature has allocated petroleum prices in 1973-74 led to a 120 per- rates significantly in the 1970s. to a mixed group of countries. cent improvement in the net bar- Both also have enormous oppor- They range in population from ter terms of trade for the capital- tunities for further rapid progress; tiny Trinidad and Tobago to deficit group, which allowed real but they face difficult policy Indonesia, the world's fifth most import growth rates averaging 16 choices in deciding how best to populous nation, which is also percent a year in 1972-76. Their exploit them, one of the oil-exporting group's average resource balance was 1.5 poorest members (see Table 6.4). percent of GDP in 1972. It rose But they share common features briefly to 15 percent in 1974 and The capital-deficit oil exporters as well. The principal one is a then plunged to minus 3 percent problem of development policy in 1977, by which time only The capital-deficit oil-exporting the need to utilize petroleum Indonesia and Trinidad and developing countries hold a place export revenues to effect a transi- Tobago still maintained surpluses. between the capital-surplus oil tion to sustainable and equitable On average, resource balances did exporters and the oil-importing growth. They typically have the not improve significantly until the developing countries. They share revenue to assist them signifi- second oil-price increase of common interests with the former cantly over the next 10 to 20 years. 1979-80. The deficits were in trying to improve the returns to Such a period is not all that long financed largely with credits from their oil exports; and with the lat- for achieving fundamental struc- international capital markets, tural change (Japan and South eagerly offered on the strength of Korea notwithstanding), par- oil reserves. 1. The capital-deficit oil exporters are ticularly in agriculture. A second Most of the oil-exporting coun- shown in Table 6.1 under the category "oil exporters." The capital-surplus oil exporters common characteristic is the tries have close fiscal ties between are Iraq, Kuwait, Libya, Qatar, Saudi Arabia nature of the short- to medium- the oil sector and government. and the United Arab Emirates. run difficulties of economic Typically, over half of government 88 revenue originates from oil-rent adjustment. Contractionary been relatively successful in chan- taxation. Increased oil revenues policies were adopted in Algeria, neling resources to their rural sec- precipitated particularly sharp Ecuador, Indonesia and Nigeria tors. increases in public investment. in the late 1970s. In the case of As an anti-inflation measure a On average, the growth rate of Indonesia these included a 34 per- number of oil exporters sub- investment rose from 9.2 percent a cent devaluation of the rupiah in sidized domestic prices of year in 1970-73 to 14.3 percent a late 1978. By mid-1980 over half of petroleum products. As well as year in 1973-77. Savings as a pro- the resulting gain in competitive- being a heavy drain on budgets, portion of GDP initially jumped ness in manufactured exports and subsidies did nothing to en- from around 22 percent in the import substitutes had been courage energy conservation. early 1970s to 41 percent in 1974, eroded by domestic inflation as Growing domestic oil consump- but fell to 34 percent by 1977. the real exchange rate reverted to tion promises to be a major factor Public sector savings followed a its previous position. In the proc- limiting the growth and, indeed, similar pattern, in part because ess of adjustment, private invest- the existence of net petroleum nonpetroleum tax revenues ex- ment stagnated relative to the exports. panded slowly. At the same time, dynamic growth of the public sec- public sector capital spending tor. This phenomenon charac- Outlook tended to be maintained at high terized several members of the The second round of oil price levels in accordance with plans group after 1974, as private sav- increases in 1979 and 1980 caused formulated immediately after the ings were diverted to fund public the current account balance of the oil-price rise. In 1976-79, public investment programs. capital-deficit group to shift from sector deficits rose to historically Public industrial investment a deficit of $20 billion in 1978 to a high levelsfor example to 16 undertaken by oil-producer surplus of $5 billion in 1979. percent of GD? in Nigeria in governments has tended to favor Although the second oil-price rise 1978-79 (see box overleaf). large, capital-intensive projects, was smaller in percentage terms Substantial increases in spend- frequently in hydrocarbons, but than the first, its potential effect ing were largely directed at the also in steel, fertilizer and cement. on oil producers may be rather provision of infrastructure and They involve long lead times; as a similar. While the nonoil GDP of other basic services. The height- result, incremental capital-output typical oil producers rose by about ened demand for construction ratios (the amount of extra invest- 40 percent between 1973 and 1978, and other goods and services not ment needed to produce an extra the value of exports increased rela- readily importable was reflected in unit of output) tended to rise over tive to GDP, and shares of oil in a rise in their relative prices as well the 1970s, despite the shift of the total exports and public revenues as in general inflation. The real nonoil economy toward construc- were higher. For some producers, exchange rate relative to the dollar tion and services, typically rather the prospective windfall relative (the nominal rate adjusted for the labor-intensive activities. In par- to GDP is therefore comparable. country's rate of inflation relative ticular, agriculture is often The medium-term outlook is to that in the US) appreciated be- neglected, although some pro- bright for the oil-exporting tween 1972 and 1977for exam- ducers (such as Indonesia) have developing countries, at least as ple, in Nigeria (50 percent), Indonesia (70 percent), Gabon (40 percent) and Ecuador (25 percent). Table 6.4 Selected capital-importing oil exporters: These rises boosted public sector country characteristics deficits by raising the costs of Share of Share of Share of domestic purchases relative to oil mineral agriculture in manufacturing sector nonmineral in total revenues denominated in dollars. Real GDP growth rates in GDP GDP exports They also adversely affected non- (annual percentage) (percentage) (percentage) (percentage) fuel exports, which fell between Countr!, 1960-73 1973-77 1976-79 1977 1970 1977 1977 1970 and 1980. Algeria 3.3 5.3 8.4 30 15 13 1 The difficulty of scaling down Ecuador 5.7 7.8 5.3 12 28 23 2 Indonesia 5.3 6.6 6.6 19 50 39 2 expansionary public expenditure Nigeria 5.3 6.5 4.7 28 54 47 1 programs and the consequent Trinidad 3.7 4.4 5.5 40 5 5 5 public sector and trade deficits led Venezuela 5.4 6.3 5.1 22 9 8 2 to an "overshooting" pattern of a. 1965-73. 89 Nigeria In the early 1970s agriculture provided balance of payments pressures and boost Government capital spending in- about 50 percent of GDP. The debt-service government revenues. GDP increased at creased from 2 percent of GDP in 1973-74 burden was light, and a rapidly develop- 7 percent a year between 1970 and 1973, to almost 20 percent in 1975-79 (see ing oil industry was starting to relieve considerably more rapidly than in the figure). Federal, state and local govern- 1960s. ments together with public enterprises Higher oil prices transformed the pat- accounted for at least 70 percent of total tern of the economy. By 1972 oil already domestic investment in 1974-77. Current Nigeria constituted 83 percent of Nigerian spending emphasized social services, Export and import volumes exports. The first oil price rise led to a notably education. In 1960 the primary (1963 100) threefold improvement in Nigeria's terms school enrollment rate was 36 percent; by 1,000 of tradea windfall gain equal to about 1976 it had risen to 60 percent and by 1985 900 - 15 percent of 1974 GDP. Oil's share in primary education is expected to be 800 federal government revenues rose from almost universal. 700 Exports 67 percent in 1973-74 to 78 percent in Extra demand boosted inflation, and 1976-77. Total public spending rose from the exchange rate adjusted for Nigerian 600 less than 20 percent of GDP in 1970-73 to relative to US prices, was allowed to 500 / about 35 percent in 1974-77. By 1976-77 appreciate (by about 50 percent between 400 340- 200 100 - / Imports the federal budget was in deficit. 1973 and 1978). This contributed to the decline in the world market share of nonoil exports. The world market share of traditional exports declined by one-third, while the shares of nontraditional pri- 01 I I I I I Ac. 1963 70 71 72 73 74 75 76 77 78 79 Nigeria mary exports and manufactured exports -69 declined by 44 percent and 71 percent. By Terms of trade, 1970-79 Current account and components (1971-73 WI) 1976 the pressure of increased domestic 1,10,,,, of dollars, current prIce,' +8 absorption of resources led the current +7 - 350 account back into deficit, and the country +6 - Trade balance started borrowing heavily abroad. +5 - 300 Agricultural output did not rise +4- Correct account appreciably during the 1970s and the 250 +3 urban-rural income differential rose from baori 2.6 in 1960 to 4.6 in 1977. People left the ii 200 land for the urban areas or to go into 150 nonfarm rural activities, notably con- struction. 100 Despite substantial slow-gestating "3 ' Balance on 5:rvit,e: I investment in infrastructure, Nigerian 50 GDP grew at an annual rate of 8 percent Av. 1963 70 75 76 II during 1974-77. However, the very large -69 71 72 73 74 77 78 79 1970 71 72 73 74 75 76 77 78 79 public sector investment program strained the country's administrative far as the international environ- and Mexicohave been greatly 65 percent of its merchandise ment is concerned. Oil revenues affected by production increases exports. will provide rising foreign and the 1979-80 rise in oil prices. However, for both new and old exchange earnings to meet invest- Gains from terms-of-trade im- exporters, extraction and develop- ment targets. The oil exporters provements during 1978-80 were ment policies still require formula- will also be able to borrow com- equivalent to over 6 percent of tion and coordination. Already mercially to supplement their Mexican GDP. By 1980 petroleum Mexico, after two booming years export earnings and to smooth out represented 45 percent of mer- marked by import expansion at 31 the short-term fluctuations in chandise exports and 30 percent of percent a year, has seen its real them. These countries are federal revenue. Notwithstanding exchange rate appreciate as infla- expected to remain moderate net this, Mexico's current account tion rose to 30 percent in 1980. capital importers, borrowing deficit increased by $2 billion (75 Capital inflows, responding to about ito 2 percent of their GNP in percent) between 1978 and 1979. increased creditworthiness, under- the 1980s. Petroleum accounted for 18 per- mined attempts at contractionary The "new exporters"Egypt cent of Egypt's GDP in 1980 and credit policy. As it has in a number 90 spending on domestic goods and ture in common. To satisfy their services is likely to induce real cur- import requirements, they need rency appreciation and lead to the not produce as much oil as they capacity. This, together with physical bot- "crowding out" of the private com- actually do. They therefore have tlenecks in the economy, produced some modity-producing sectors by the to make policy decisions on two projects which were hastily conceived requests of the public sector. sets of issues: and resulted in some loss of resources. Devaluation cannot long restore how large a surplus to pro- domestic competitiveness with- duce, and how to invest revenues; out some moderation in domestic how to develop their domes- Nigeria: government capital spending. The switching of tic economies so that the benefits expenditure and current account demand onto domestic output is of oil survive its eventual exhaus- balance, 1973-78 otherwise likely to result mainly in tion. inflation. Priority should be given to removing administrative and Production other obstacles to the expansion In 1978, a year when the oil- and modernization of productive exporting countries as a group ran sectors; to rural development; and only a small current account to the provision of basic services to surplus, the six capital-surplus the most needy. Particularly in the countries produced 17.5 millions early stages of the "oil boom" care of barrels a day (mbd) of oil, and must be taken to avoid allocating exported about 96 percent of it. oil revenues to "prestige" projects, Their revenues totaled $79 billion, which barely increase domestic of which all but a quarter was 75 76 77 capacity but drain domestic spent on imports. In 1980, follow- 1973 74 78 resources away from the private ing the 1979-80 oil-price increases, sector over a critical period. the capital-surplus countries To strike such a balance is not appear to have spent only about After the 1979-80 increases in oil prices, easy. It requires considerable pru- half of their total oil revenues. This the government again raised its capital dence and foresight in determin- surplus margin, varying between spending sharply (current expenditure ing the pace at which oil reserves a quarter and a half, represents less so). Attempts have been made to should be exploited. And it needs encourage investment in agriculture, and what might be termed their discre- domestic petroleum prices have been to be complemented by trade, tionary production. raised. Nigeria's proven oil reserves are foreign borrowing and incentive Since the first major oil-price sufficient for only 15 years' production at policies that will turn each oil increases in 1973-74, most of the current rates. But if domestic consump- exporter's good fortune into a capital-surplus exporters have tion goes on rising as rapidly as it did in basis for sustained and diversified the 1970s, it promises to reduce oil exports restrained the growth rate of pro- in less than 10 years. development. duction significantly (Figure 6.1, overleaf). They have done so for The capital-surplus oil three reasons: (1) to stretch the of countries, exchange rate exporters lifespan of their reserves; (2) to appreciation promises to reduce prevent oil prices from weaken- incentives for private investment The six capital-surplus oil export- ing; and (3) because the invested in manufacturing and to substi- ersIraq, Kuwait, Libya, Qatar, receipts from their discretionary tute cheap imported capital goods Saudi Arabia and the United Arab production have not appreciated for domestic labor, so contributing Emirates (UAE)face adjustment as much as the price of oil. These toward a dualistic pattern of challenges of a different kind. As a three points are connected, and development. Despite attempts to group, they vary considerably. together present the group with control costs through subsidies Kuwait (population 1.3 million) difficult policy dilemmas. and price controls, similar has a GNP per person over seven By the end of 1980 the external problems have begun to beset times that of Iraq (population 12.6 assets of the capital-surplus coun- Egypt. million). The lifespan of their oil tries totaled about $300 billion. The experience of a number of reserves ranges from over 100 Roughly half was deposited with oil exporters suggests that overly years (Kuwait) to about 25 years banks in the industrial countries rapid expansion of government (Qatar). But they have one key fea- or in the Eurocurrency markets. 91 sparsely populated (and many of minimize this tension in two Figure 6.1 Capital-surplus oil their people did not have the skills ways. First, they have sharply in- exporters' oil production, 1968-79 and experience needed for rapid creased those types of public Annual average percentage change 30 industrialization). All but those spending that offer citizens two countries have very unprom- benefits in kind rather than in 25 ising soil and climate for agricul- cash. These have included more 20 ture. And all initially lacked the and better recreation facilities and Ratio of reserves adequate infrastructural support subsidized housing. In addition, 15 to 1979 Output that a major industrialization drive the provision of education and Iraq (25) requires. health services has been greatly 10 rs Ar,bja (47) The single biggest advantage expandedwith obvious long- j-UAE (44) enjoyed by the capital-surplus term benefits for economic Libya (31) countries was abundant capital for advance. Second, governments Qatar (21) investment. Their investment have encouraged foreign immi- Kuwait (72) ratio was already high in 1973; at 40 gration so as to provide needed 3968-73 1973-79 percent of their nonoil GDP, it skills and to moderate the upward compared with average rates of 26 pressure on local wages. percent in the middle-income Immigration has certainly Nearly all the rest has also been countries. However, the capital- helped to provide most projects invested in the industrial coun- surplus group then raised their with the necessary manpower, but tries, in equities, government investment ratio to an average of it has also created some social securities, real estate, and so on. 44 percent in 1975-78. tensions. Incomplete statistics As major investors, the capital- The results of this heavy invest- suggest there were 1.5 million surplus countries are affected by ment have been impressive. expatriate workers in the six coun- developments in the industrial Nonoil GDP rose by an estimated tries in 1975; with dependents, world. Currency fluctuations, in- 15 percent a year in real terms be- they totaled 3.2 million, compared flation and slow growth are all tween 1973 and 1978. Infrastruc- with a native population of 20 potentially harmful to their inter- ture was developed quickly, turn- million. They were least important ests. For most of the 1974-79 ing shortages of port facilities, for in Iraq; in the UAE, by contrast, period, their real rates of return on example, into capacity that should there were 1.8 times as many investments were low, perhaps be ample for years to come. immigrants as nationals in 1975 negative. This experience under- This rapid development has and they made up 85 percent of lined their stake in the health of spawned new types of problems, the UAE workforce. If the six the industrial economies; simul- however. The six countries faced economies continue to grow as taneously it demonstrated that (and still face) a particular dilem- fast as they did in 1974-78, even preserving oil can be more valua- ma about the internal distribution rapidly rising productivity and ble than producing it. Striking the of income. Their governments increasing participation rates of balance between these two con- naturally want all the people to nationals in the workforce would siderations is the central produc- share in their patrimony and have not stop the number of migrants tion issue of the 1980s. been under popular pressure to from reaching twice the 1975 num- ensure that this happens. At the bers in 1985. Diversification and development same time, a simple division of the The consequences of this in- During the past eight years, the oil revenues in the form of transfer crease are mixed. From a purely capital-surplus countries have payments would make it hard to economic point of view, the most made considerable progress in engender the motivation to work obvious drain on the host coun- expanding their economic base. in construction and in newly tries is the money remitted by Their task has not been so easy as established industries. Even foreign workers. These remit- it may at first sight appear. Cer- where the ñiotivation existed, the tances from the six countries tainly they have been spared some wages people would expect increased from $1 billion (1973) to of the constraints on growth that (coupled with initially low pro- about $5 billion (1979)a major other countries experience. But ductivity) would make industries sum for their home countries, but they have faced several difficulties grossly uncompetitive in interna- a relatively small outflow for the of their own. With the exceptions tional terms. host countries (less than their offi- of Iraq and Saudi Arabia, they are Governments have sought to cial aid, for example). 92 The budgetary implications of a the development goals of the early of these industries during the large immigrant presence have 1970s have been met. Ports, roads 1980s will be a significant indicator more important consequences. and telecommunications have of the six countries' success in pre- Since the six countries' govern- been expanded; administrative paring themselves for an oil-less ments all subsidize food, fuel, buildings, schools, universities future. water and electricity, the real cost and hospitals have been built or of foreign workers is much greater are nearing completion. The Oil-exporting countries' prospects than their wages. emphasis has shifted toward The patterns of development in Largely for these social reasons, developing manufacturing indus- the oil-exporting countries sug- governments may become in- try and the human skills it needs. gest that the 1980s will differ from creasingly reluctant to accept Saudi Arabia's current five-year the 1970s in several important further rapid increases in plan is the most prominent exam- respects. immigration. They are more con- ple of this new priority. The other As Chapter 4 demonstrated, cerned about boosting domestic capital-surplus countries are mov- oil prices are likely to continue ris- productivity so as to maintain the ing in the same direction. ing in real terms during the next 10 pace of economic growth. The choice of industrial projects years. For a period of about three is being influenced by the coun- years in the mid-1970s, the oil Inflation and investment priorities tries' particular mix of oil, abun- exporters accepted both falling Despite the easing of manpower dant investment capital and scarce real oil prices and negative real bottlenecks through immigration, indigenous labor. Their compara- returns on their financial assets. the rapid development of the tive advantage obviously lies in That combination is unlikely to 1970s increased inflationary the various branches of the happen again. The capital-surplus pressures in the capital-surplus petrochemical industry, liquefied producers are gearing their oil countries. Consumer prices rose gas plants and aluminum smelt- output to suit their domestic by less than 5 percent a year from ing. These are based on petroleum priorities more than they once 1968 to 1973 and by 12 percent a and gas, but are also capital in- did, and these priorities suggest year since then. Within the group, tensive and embody advanced that production will be kept closer Saudi Arabia had the most rapid technology. They take time to to desired levels. inflationan average of 16 per- establish, as do the complemen- Oil-exporting countries are cent a year (1974-79) with peaks tary marketing arrangements. going to shift an increasing pro- exceeding 30 percent in both 1975 However, one methanol plant had portion of their production to and 1976. Since then, there has already gone on stream in Libya in domestic consumption. The oil- been a marked deceleration. 1978, and a number of other large exporting developing countries in These figures for consumer petrochemical and gas plants are particular are increasing the inten- prices do not reflect the nature of being constructed in the region, siveness of their energy use as inflation in the six countries. especially in Saudi Arabia. An they industrialize and urbanize. Growing subsidies have held aluminum smelter has been built They will therefore moderate the down the prices of basic consumer in the UAE; there are steel mills in growth in their oil exports (and in goods; most important of all, the Qatar and Iraq, with one planned some cases may actually start inflationary impact of rapid for Saudi Arabia. reducing exports before the end of growth has been concentrated not A shortage of domestic skills the decade). on consumer goods but on land has meant that many of these big The surge in migrant workers' values and construction. Urban projects rely on expatriate techni- remittances that characterized the land prices rose dramatically and cal and managerial staff. A second mid-1970s is unlikely to be re- buildings were erected with little group of new industries is smaller peated on that scale. The capital- regard to cost and ultimate in scale and more labor intensive surplus countries are taking a less demand. In the case of the UAE, and uses less complicated technol- favorable view of immigration; the this eventually resulted in a col- ogy. Examples include metal labor-intensive phase of their lapse of the property market. engineering, building materials development (notably construc- Inflation is thus another factor and electrical industries. They are tion projects) is becoming less sig- inducing caution on the part of the providing opportunities for do- nificant. Chapter 5 projects some six countries' governments. mestic entrepreneurs, and are increase in remittances during the The final reason why growth is geared more heavily to local 1980s, but at less than half the rate now slowing down is that many of markets. The growth and spread of the past seven years. 93 Nonmarket industrial economies: the "intensive strategy" The nonmarket industrial econ- tions varied from 18 percent for investment rate and determined omies,1 having long appeared the USSR to 95 percent for Poland. efforts to expand and improve relatively insulated from changes While there are considerable incentives by increasing the sup- in the world economy, were also differences between countries in ply of consumer goods, it became profoundly affected by the events this group, the pace of future impossible to reverse declining of the 1970s. The rise in oil prices economic growth in most productivity growth. drew these countries into tighter depends heavily on their adjust- Furthermore, agricultural out- interdependence, with the Soviet ing to higher energy costs, put grew slowly while demand for Union supplying the other five improving their agricultural per- high-value food products acceler- with oil well below international formance and expanding their ated. The combination produced a prices. At the same time, all their export capacity, particularly of sharp decline in food exports or external convertible currency manufactured products. rapidly rising food imports, at a accounts were deteriorating time when manufactured exports rapidly. Their combined trade A changing strategy were falling. In the case of the deficit with the industrial market USSR, food imports rose from vir- economies grew from about $1 For nearly 30 years after the tually nil during the 1960s to about billion in 1971 to $12 billion in 1975 second world war, most of the one-quarter of all convertible cur- but increased more slowly nonmarket countries pursued a rency imports during the late thereafter as the pace of their development strategy they desig- 1970s. economic growth fell off. nated "extensive development." Today, most of the nonmarket However, due to rapidly rising Based on high levels of invest- countries describe themselves as interest payments, current deficits ment, principally in heavy indus- shifting to a strategy of "intensive continued to grow throughout the try, this strategy was successful in development," emphasizing in- decade, particularly for the producing rapid output growth creased efficiency and improve- smaller countries. and satisfying the essential needs ments in product quality. They With the exception of the Soviet of large parts of the population. It aim to modernize the capital stock Union, the nonmarket countries was less successful in promoting and boost labor productivity. The have been experiencing many of economic adjustment to a chang- former implies heavy imports of the same problems as the semi- ing world economic environment. technology, the latter requires industrial countries. Economic As a result, "extensive develop- increased consumption and a growth declined slightly in the ment" gradually exhausted its growing allocation of resources to 1970s but continued to be higher capacity for rapid growth and the production of consumer than in the industrial countries welfare improvements. goods. despite mounting external deficits Until the mid-1970s, economic If this strategy is to be success- and growing imbalance between growth was due to increases in ful, the nonmarket countries will energy consumption and domes- both capital and labor inputs, and have to develop closer ties with tic energy supply. Heavy borrow- rising productivity. During the the industrial countries, resulting ing more than doubled the 1970s, however, labor force initially in increased trade deficits amount of outstanding converti- growth declined. Productivity and more borrowing. Eventually, ble currency debt between 1975 gains slowed down because of the they expect exports to rise and and 1979, to around $65 billion. By low technical efficiency of much dependence on food imports to 1980 the debt-service ratio based of the capital stock. Squeezed con- decline. This will require them to on convertible currency transac- sumption, and a continuing produce a broad mix of competi- emphasis on producing inter- tive exports and to achieve a divi- mediate and capital goods at the sion of labor complementary to 1. For the purposes of this Report, the USSR, expense of consumer goods, that of the industrial economies. Bulgaria, Czechoslovakia, the German depressed individual incentives. Some of the nonmarket countries Democratic Republic, Hungary and Poland. Without some reduction of the (Hungary, for example) have 94 already gone a considerable way achieved in the recent past, and The success of nonmarket coun- down this road; others are finding further cutbacks are likely. The tries in exporting to the industrial the journey more difficult. future exportable surplus of countries is further complicated There are two areas in particular natural gas is even more uncer- by the fact that competition from where major adjustments have to tain. Its size will depend on the the semi-industrial developing be made: energy and manufac- USSR's being able to acquire the countries will be intense tured exports. advanced technology needed to (especially if industrial countries' develop its gas resources, and on economies are sluggish). Even if Energy potential customers in western the nonmarket countries establish In contrast to the industrial coun- Europe being willing to finance its technological and marketing tries, the nonmarket countries production and pipelines. The advantages, they may have increased the energy intensity of USSR would of course benefit difficulty competing; at present their output during the 1970s; they from the convertible currency and wage levels, the semi-industrial now have an overall energy inten- higher prices it could obtain by countries enjoy significant cost sity more than twice that of OECD selling to the industrial countries. advantages. countries. This is the result both of But given the already critical The nonmarket countries a different composition of GNP energy shortages in several of its therefore face two difficult and of widespread inefficiency in nonmarket neighbors, it may be challenges in the 1980s. They have energy use. The Soviet Union has obliged to sell a large proportion to adjust their development provided the smaller countries of its exportable gas to them. strategy to new internal and exter- with subsidized petroleum, which Manufactured exports nal constraints; and more has been allocated according to specifically, they have to adjust to centrally determined physical The prospects for manufactured rapidly rising energy costs. Both output targets, without regard to exports will be determined by adjustments are already overdue. scarcity value. And central control three factors: If they are delayed any longer, over aggregate demand resulted how quickly the "intensive" growth is likely to be increasingly in the nonmarket countries' main- development strategy succeeds in constrained. Some experts believe taining relatively rapid growth in producing high-quality, price- that the nonmarket countries will the face of higher world energy competitive manufactured grow less rapidly than the 3.7 to costs and mounting balance-of- exports; 3.9 percent a year projected in payments problems. the willingness of the USSR to Chapter 2. Most of the nonmarket coun- continue the present pattern of tries suffered declining energy subsidized energy supplies and Relations with developing self-sufficiency during the 1970s. other raw materials to the smaller countries Only in the Soviet Union did the nonmarket countries, thereby sav- growth rate of primary energy ing them the need to pay for such The nonmarket countries' trade production consistently exceed imports by increased manufac- and aid links are highly concen- that of consumption. Energy tured exports; trated on a few socialist countries (mostly crude oil and derivatives the maintenance of credit- in the developing world (notably but recently natural gas and worthiness of the nonmarket Cuba and Viet Nam). In the past, electricity as well) increasingly countries, so that they can borrow however, they have had close ties became the USSR's major export to pay for imported capital goods with certain other countriesfor to the industrial countries, pro- from the industrial countries. example, Egypt and Somalia. And ducing more than two-thirds of Large existing debt (and its the USSR continues to have sig- convertible currency earnings by unfavorable term structure) nificant trade and aid programs the late 1970s. The USSR exported means that some face poor debt with India. a similar quantity of energy to the prospects, even under the best of Given the difficult external posi- smaller nonmarket countries, circumstanceS. The private mar- tion of most nonmarket countries, supplying about three-quarters of ket's risk assessment presupposes they are unlikely to become siz- their imported energy needs. a de facto cross-guarantee among able markets for the manufactured The Soviet Union's petroleum the nonmarket countries. If that exports of developing countries. output is unlikely to grow so fast supposition were to be altered, Another barrier to trade is the in the 1980sindeed targets have the outlook for individual coun- absence of institutions providing already been reduced below those tries would rapidly deteriorate. capital to finance it. Neither 95 national banking institutions in the scale of commercial and semi- applies to them. the nonmarket countries nor the commercial financing in the past Other aid donorsand common banks of the Council of and will continue to do so. increasingly the developing coun- Mutual Economic Assistance (for- Two countries, Cuba and Viet tries alsoare calling for more merly "Comecon") provide Nam, receive 96 percent of all assistance from the nonmarket medium- or long-term credits to financial assistance from the non- countries in worldwide develop- developing countries on a signifi- market countries. Excluding aid to ment efforts. But on present cant scale. Those provided Cuba and Viet Nam, aid as a share prospects, they are unlikely to typically take the form of financ- of the nonmarket countries' GNP change the basic conditions pre- ing specific equipment or turnkey is estimated at 0.02 percent for vailing in their commercial and aid facilities and often incorporate recent years. These countries do transactions. "buy-back" agreements. These not consider that the United restrictive conditions have limited Nations 0.70 percent aid target 96 7 Human development: a continuing imperative Some 630 million people will still tion and fertility reductionare since it is above all their potential live in poverty in the year 2000 closely interrelated. Improve- that is being wasted.) Interrupting even on the favorable assumption ments in one area can facilitate human development programs that High-case growth is achieved. improvements in others and rein- may be costly, though in ways that But, as Chapter 2 described, force all aspects of development. may not be immediately obvious. under the Low case, the poor Human development depends The effects of some programs could number 850 million by then, on economic growth to provide can, however, be felt much more 100 million more than now. the resources for expanding pro- rapidly and can complement Economic growth thus con- ductive employment and basic adjustment efforts in the directly tributes to the alleviation of services. In turn, these services productive sectors. Training pro- poverty in all developing coun- primary and vocational educa- grams can be accelerated and tries, most particularly the low- tion, primary health care, nutri- made more responsive to the income ones. But growth by itself tional and family planning pro- needs of business and trade. is not sufficient, as the 1980 World grams and safe water supplycan Higher food production can both Development Report made clear. make striking contributions to substitute for imports and con- Human developmentmeasures growth. tribute to better nutrition. Specific to increase the productivity and Since many human develop- health and nutrition programs can incomes of the poor directly ment programs are publicly have strikingly rapid effects: a must accompany and support the funded, they are especially project to reduce anemia among growth of production. In a vulnerable when growth is Indonesian workers improved harsher external environment, threatened and budgets are under their productivity within eight human development and the pressure. Brazil, India and weeks. The effects of malaria con- finance to support it may be at Turkey, among others, have either trol can also bring quick benefits. risk. This chapter discusses ways cut back or slowed the growth of Human development programs of protecting and enhancing their social programs in part that are sustained through the human development programs; it because of external constraints. present difficulties will contribute also considers two related issues: For developing countries to future growthjust as the the availability of food and the everywhere, the exigencies of ability to manage the present growth of population. adjustment over the next 5 to 10 adjustment is built in large years could undermine the com- measure on past human develop- mitment to social programs, ment efforts. Cross-country com- Human development and whose full benefits are generally parisons show that countries with adjustment felt only in the long term high literacy and life expectancy perhaps, in the case of reducing in 1960 tended to grow faster in Human development links the fertility or extending literacy, the the 1960s and 1970s. So, too, a creation of productive work lifetime of a generation or more. country's capacity to respond opportunities for the poor with Yet looking to the future, sus- to the changing and uncertain the provision of goods and ser- tained growth depends considera- environment of the 1980sto pur- vices to meet their essential needs. bly on a continuous improvement sue successfully the "outward The elements of human develop- in people's skills and energy. (This orientation" described in Chapter menthealth, education, nutri- is particularly true of poor people, 6will depend critically on the 97 skill and flexibility of its labor force other programs, especially when The costs of primary education and managers. their benefits are felt in remote (see box) are mainly teachers' sal- rural areas and by "constituen- aries. Transport and other energy- cies" (women and children, for related costs are generally insig- Adjustment constraints and example) with little political clout. nificant. Even in developed coun- social programs Social programs, moreover, com- tries, direct, nonsalary expendi- When a country must use more of pete with other sectors for skilled ture rarely exceeds 10 percent of its resources to meet external (and often scarce) administrators primary education budgets. demands, and particularly when and technicians. In countries like Primary health programs (see adjustment requires at least a those of sub-Saharan Africa with box, page 100) use more foreign period of retrenchment, pressure few trained managers, personnel exchange: their effectiveness can on public-sector finances is likely may be as serious a constraint as be sharply reduced when foreign to arise. finance. exchange is short. The recurrent costs of social There are no simple rules by Rural water supply systems programs, especially salary costs, which to allocate resources be- vary considerably in their use of tend to make them a prominent tween human development pro- foreign exchange. Village hand and therefore vulnerable part of grams and other productive pumps use little or none; diesel government budgets (Table 7.1). activities. Much depends on how pumps depend on it heavily. Even though their impact on intensively the various programs However, water supply systems productivity may far exceed some use the resources which have can be designed to minimize projects financed through capital become scarcer-energy and energy consumption and even budgets, they may fall foul of the foreign exchange. Their use in produce some energy by recover- erroneous notion that only spend- social programs depends on ing methane. ing on physical capital raises several factors, including the There is no reason to single out future incomes. Their impact is design of the program and how social programs for cuts during an often less tangible than that of elaborate it is. For example, adjustment period. In many cases, however, budgetary con- Table 7.1 Central government expenditure on health and education, straints will force cuts in spend- selected countries, 1977 or 1978 ing, and a share of this burden will fall on human development pro- As share of total central grams. Then the issue becomes government expenditure (percentage) Per capita (1975 dollars) how best to maintain the services Country and country group Education Health Education Health they provide. Low-income Protecting human development Africa programs Burundi 20.6 4.7 6 1 Ethiopia 11.5 4.9 2 1 If financial stringency prevents Malawi 11.1 4.1 4 2 the expansion of human develop- Mali 21.6 6.2 5 1 ment programs, they can often be Niger 23.3 6.0 6 2 Rwanda 15.2 4.8 3 1 made more cost-effective. The pat- Sierra Leone 16.0 7.6 7 3 tern of social spending in practice Somalia 14.0 6.1 5 2 is frequently biased in various Tanzania 13.6 7.1 7 4 Togo 13.7 5.8 12 5 ways. Urban programs take prior- Upper Volta 15.6 5.5 3 1 ity over rural; curative, high- Asia technology medicine has priority Burma 11.2 5.9 2 1 over preventive, low-cost health Nepal 11.1 5.5 2 1 care; and university education Sri Lanka 11.6 5.9 8 5 develops more rapidly in relation Middle-income to needs than primary education. Bolivia 25.6 8.0 18 5 Ghana Even if a government favors main- 19.5 7.4 11 5 Kenya 21.8 8.2 12 5 taining human development pro- Philippines 13.2 5.1 7 3 grams, they may still be uninten- Zambia 16.6 7.3 23 11 tionally denied resources for Source: IMF. administrative reasons. If budge- 98 treatment and disinfection, text- Paying for primary education books, chalk and paperhas Teachers' salaries account for an average ment and supplies are adequate (see proved the easiest to cut. Yet 95 percent of the operating costs of pri- table), nonsalary direct costs averaged when this happens, the effective- ness of the entire program is com- promisedand the budgetary Allocation of public current expenditure on primary savings may be disproportionately education, selected developing countries small. It is in this area that external (percentage) assistance can be particularly Country group and region Year Teachers' salaries Other direct expenditures helpful during adjustment; the returns to funding these items Low-income may be large and the costs minor. Madagascar 1975 98 2 Mali 1977 97 3 More assistance of this kind Malawi 1975 98 2 would represent a new departure Middle-Income for many donors concerned about Africa the direct recovery of costs and the Congo 1976 98 2 "open-endedness" of commit- Ivory Coast 1976 90 9 ments. It therefore bears repeti- Zambia 1978 90 7 tion that recurrent expenditures Asia are or can be highly productive; Thailand 1976 90 1 that costs can often be recovered Latin America in the long term (though in- Argentina 1977 96 4 Dominican Rep. 1977 97 1 directly) and that long-term inter- Ecuador 1977 98 2 national support for human devel- Peru 1977 90 1 opment programs can (and should) Europe, N. Africa be planned for. Algeria 1974 97 1 The scope for low-cost programs Portugal 1977 92 2 has not been fully exploited. Average 95 3 Experience suggests ways of Source: UNESCO doing so, even of turning financial pressure to advantage: In evaluating new invest- mary education in developing countries: only 6 percent of current spending at the ment, planners should consider other direct recurrent costs are around primary level. 3 percent. For example, Bangladesh in the recurrent and foreign ex- 1979-80 devoted only 1.2 percent of recur- change costs. Donors should be Allocation of public current rent primary education spending to non- expenditure on primary more prepared to finance recur- salary recurrent items, about .06 percent education, selected industrial rent costs: in Malawi, where of central government current spending. almost the entire development countries, 1977 In the Dominican Republic in 1977, non- salary recurrent spending on primary edu- (percentage) budget for health is aid-financed, cation was 0.1 percent of central govern- Teachers' Other direct the foreign exchange cost of main- Country salaries expenditures ment recurrent expenditures (see table). taining medical equipment has These data could understate require- Belgium 88 12 often been neglected. ments: many developing-country school Denmark 66 5 Finland 62 5 Budgetary savings can be systems are short of essential equipment and supplies, while in other cases, stu- Japan 79 5 made by charging for certain ser- dents must provide some items (like text- Netherlands 81 2 vices (where this is consistent books) themselves. However, for a num- Average 75 6 with national policy). Some of the ber of industrial countries where equip- Source: UNESCO burden on public services can be relieved by allowing the private sector to provide for middle-class tary pressure can help to correct The most vulnerable types of needs (for university education or such biases and make programs spending vary from country to certain kinds of health care, for more cost-effective, the momen- country; but in many, nonsalary example). In the Philippines, tum of human development may recurrent expenditureon drugs, much secondary education is pri- not be lost. chemicals and chlorine for water vate (though generally inferior to 99 Food and nutrition Paying for primary health care Better nutrition is vital to human Primary health care systems can use com- commercial energy costs of primary mercial energy and foreign exchange health care would be less; in a recent rural development. Higher agricultural quite intensively. Referring patients to development project in Indonesia, vehi- production is, moreover, usually secondary and tertiary levels requires cle operation and maintenance costs were essential to raise the incomes of transport. So does the supervision of estimated at 8 percent of total operating the poor. These two dimensions peripheral health workers and the deliv- costs of the health program. Drugs are typically a large share of put food at the center of issues, as ery of drugs. Refrigerators for vaccines and small generators for rural hospitals health budgets-24 percent in Thailand well as highlighting the perennial require power. The secondary and terti- (1979), 22 percent in Tanzania (1976), 30 question of whether the world can ary levels of health careessential to percent in Ghana (1976-77). In most produce and distribute enough support the primary level service developing countries, these must be food to feed its expanding popula- require sophisticated medical equip- imported. Without reducing quality, sav- tion. ment, energy for operating theaters, food ings in the drug bill may be possible preparation and refrigeration of blood through changes in procurement meth- Agriculture has been given banks and other supplies. ods and local drug formulation. A recent greater emphasis in recent think- Country examples illustrate this study of drug procurement in Ghana ing on development. While indus- dependence. Some 22 percent of Malawi's found that in 1976-77 savings on drugs of trialization is critical to higher pro- recurrent spending on health in 1979-80 as much as 20 percent could be made if was devoted to medical equipment and over-prescription was controlled. A ductivity and growth, in most drugs. Plant and vehicle charges account- second study in Tanzania estimated countries it has been supported ed for another 20 percent. Since spending potential savings of 30 percent by con- by broadly based agricultural on drugs, medical equipment, vehicle trolling over-prescription, central pur- progress. The 1979 World Develop- maintenance and fuel involves foreign chasing and use of generic rather than ment Report showed that agri- exchange almost exclusively, perhaps 40 brand-name drugs. Indonesia has saved cultural success generates domes- percent of Malawi's recurrent health some 50 percent of costs through bulk budget requires foreign exchange. The procurement of essential drugs. tic demand for industrial prod- ucts; supplies cheap food to industrial workers and raw materials for agro-processing; earns foreign exchange to finance the public system); and in Egypt, a So may a more rational use of imports of capital and intermedi- reduction in the supply of publicly existing transport services. In ate goods for industry; and provided contraceptives was off- some countries the costs of public encourages labor-intensive indus- set, for the middle class at least, by procurement of drugs can be tries in small towns and villages. private supplies. However, not all reduced (see box). Chapter 6 of this year's Report services can or should be paid for Personnel policies can also stresses how difficult adjustment by recipients; regional and social play a part. For many human has been in countries that have inequities may be perpetuated if development programs, their neglected agriculture. Virtually all excessive emphasis is placed on greatest asset is a skilled and com- the sub-Saharan African countries cost-sharing. mitted staff. It is usually difficult whose recent growth has been Costs can also be shared with to cut staffing levels, but greater slow have had a particularly poor local communities. In Ethiopia, delegation to paraprofessionals is record in agriculture. On the other people have, through peasant frequently possible, as is more hand, countries such as India or associations, given their time to effective organization. Ivory Coast, which have devel- build and maintain primary With the right priorities and oped a solid agricultural base, can schools, and it is intended that administration, cheapness and cov- more easily adjust to external they contribute to teachers' sal- erage need not be in conflict. In pressures. aries. Some evidence suggests China, for example (see box) it is However, success in agriculture that shared and participatory ser- estimated that annual spending does not automatically mean that vices are also more responsive to on primary education is only $20 food supplies are secure in the local needs. per pupil and on health care only sense that food-deficit regions or The recurrent costs of provid- $7 per person (of which $4 is households have enough to eat ing a given level of service can public expenditure) even though every year. In some countries with often be reduced. Improved com- the health service covers virtually expanding agricultural produc- municationsvia posts or tele- the whole population of 1 billion tion, the poor do not eat enough, phonesmay reduce travel costs. people. whether the food is produced 100 Poverty and human development in China China's economic structure and national vices. Production brigades may finance (1966-76), probably because the programs income per person are similar to other the training of one or more "barefoot doc- were financed largely from local low-income countries, but the physical tors" who both provide primary health resources. quality of life of the bulk of the Chinese care and often participate in the brigade's Paradoxically, the income share of the people is strikingly better than in most work as well. poorest 40 percent of China's popula- other low-income countries. From 1950 to State subventions pay for some of the tionestimated at around 18 percentis 1979 life expectancy at birth increased programs, but participating groups also not very different from that of other low- from 36 years to 64. Starting at about the provide support and participate in deci- income Asian countries. However, much same level in 1950, the average low- sions concerning them. Local finance has of China's inequality results from regional income country improved life expectancy certain drawbackspoor regions can economic differences. Within communes to 51 by 1979, while the average middle- afford only the most rudimentary facil- and cities, income inequalities are small, income country started higher (48), but ities. Nonetheless, China's impressive largely because property is collectively ended lower (61). record in human development has sur- owned. Moreover, the poor in China are, China's success in this area can be vived several major upheavals, par- as the quality of life indicators show, far attributed in part to a concerted effort in ticularly the Great Leap Forward better off than those at similar income several related and interdependent areas: (1958-60) and the Cultural Revolution levels in most other developing countries. basic education, health and nutrition, and population control. Mother and child health care and nutrition programs were, Basic indicators for example, widely available. These Annual reduced infant mortality and hence the population Net primary Life exvectancy GNP "rowth rule Adult at drth number of children needed to attain a Country and per person literacy school enrollment country group percentage) (percentage) (years) desired family size. And by reducing the (dollars) (percentage) 1979 1970-79 1976 1975 or 1977 1950' 1979 birth rate the pressures on health and education facilities were reduced. China 260 1.9 66' 93b [36] 64 Such programs also exist in other Sri Lanka 230 1.7 85 62 [55] 66 developing countries, but China has gone India 190 2.1 36 64 [38] 52 further than most in organizing its Indonesia 370 2.3 62 66 [35] 53 human development efforts. They have been closely integrated with the social Low-income mobilization begun with the Revolution countries 210 2.3 39 56 [37] 51 in 1949: even family size norms are backed Middle-income by party organizations and discussed as countries 1,420 2.4 72 71 [48] 61 communal responsibilities. Every level Industrial of society, from the production team countries 9,440 0.7 99 94 67 74 through the communes to the national Most 1950 data are estimated. level, plays a role in providing social 5cr- 1979. domestically or imported. Since would gradually worsen. Some Food prices have fluctuated con- an adequate food supply at both countries would be unable either siderably in real terms, but do not the national and international to feed themselves or to afford show a pronounced upward trend level is clearly a precondition for necessary imports; hunger and (Figure 7.1, overleaf). Some mid- food security, this section con- starvation could become wide- dle-income developing countries siders world trade in food. It looks spread in many low-income coun- have increased their food imports at the impact on poor countries of tries by the 1980s. Fortunately, this (Figure 7.2, overleaf), but this has price stability and reliability of pessimism has not been borne out not generally reduced the security supplies. And it considers ques- by events, although some serious of their supplies. While there is no tions of still greater importance problems have emerged. evidence that outright starvation efforts to increase self-sufficiency Globally, food production has has become more pervasive, and improve food distribution. grown marginally faster than nonetheless the number of population. Consumption per malnourished people has proba- World food in the 1970s person has been increasing in bly increased and the position of Since the 1960s, and especially most parts of the developing particular groups and certain since the 1973-74 world food world, with sub-Saharan Africa areas may have deteriorated crisis, many observers have pre- and parts of Asia the major ex- seriously. Most of the under- dicted that world food shortages ceptions (Table 7.2, overleaf). nourished live in the countryside. 101 Table 7.2 Foodgrain consumption per capita, 1961-79 Figure 7.2 Foodgrain production, Average annual growth rates consumption and net trade by (percentage) country group and for selected Kilograms per capita 1961-64; 1970-73; countries, 1970 and 1980 Country group and region 1961-64 1970-73 1976-79 1970-73 1976-79 World total 312.1 342.8 Consumption Net exports 362.1 1.0 0.9 Frodautioo1 Net import Developing countries 223.0 229.7 239.9 0.3 0.7 1980 Other industrial Low-income countries 207.1 202.7 202.4 -0.2 0.0 J970 market economies Sub-Saharan Africa 159.5 151.9 141.3 -0.5 -1.2 South Asia 215.6 211.8 213.5 -0.2 0.2 USAICanJAos Middle-income countries 238.1 255.6 275.7 0.8 1.3 Sub-Saharan Africa 140.7 150.0 148.5 0.7 -0.2 Nonmarket East Asia 257.2 271.2 282.7 0.6 0.7 Latin America 235.7 244.0 249.1 0.4 0.3 S. Europe, N. Africa, Middle-income Middle East 390.6 441.0 495.8 1.4 2.0 China Source: FAQ. Low-income These failings result not only I I t I I Figure 7.1 World grain prices, from a shortage of production and 300 200 100 0 100 200 300 1966-80 effective demand, but also from a MOtion tons (dollars per ,n,tñe ton) series of structural changes, both Consumption Net exports Maize global and national. They include 1980 400 Senegal 350 an increase in the complexity of 1970 300 international grain markets, grow- Sn Lanka ing price instability for grains, and 250 logistical difficulties affecting both Korea 200 national and international grain- 150 handling and distribution. Exter- Argentina 100 nal pressures on foreign exchange 50 resources have played a role, as Brazil 0 have internal political conflicts Sorghum and natural disasters. India 400 350 1,200 300 200 100 0 100 200 CHANGING MARKET STRUCTURE. Ten thousand tons 300 Middle-income countries have 250 substantially stepped up their 200 imports and have become the 150 world's largest market for cereal ing foodgrains has actually 100 exports (Figure 7.3). Their grow- declined even as their overall 50 ing need for imports has resulted dependence on food imports has 0 primarily from the increasing grown-Since other exports, fre- Wheat5 affluence of urban dwellers, quently agricultural products, 400 although in some of them food have grown faster. By the late 350 production has not matched the 1970s only about one-fifth of their 300 growth of population. In addition, food import bill was for food- 250 livestock production has become grains, the rest being devoted to 200 more important, so that over a less basic commodities like meat, 150 third of total cereal consumption oilseeds, sugar, fresh fruit and 100 (and well over half of total vegetables. 50 imports) have been used to feed The low-income countries have 0 1966 68 70 72 74 76 78 80 animals rather than going directly remained more dependent on to people. In several middle- food aid than the middle-income a. US No. 2 yellow, fob. Gulf Ports. b US No, I Soft R,d Wiuler, Export Prier, Golf. income countries, the proportion countries (Figure 7.4).That depen- of export earnings devoted to buy- dence has both advantages and 102 disadvantages. Food aid reduces poorest urban and rural groups the cost of imports, but it is not are chronically undernourished. Figure 7.4 Developing countries' food imports and food aid always dependable (it has been cut The worst affected are those living Millions of metric tons off for political reasons in the in rural areas where agricultural 60 P,rcentage 100 hood old past); it tends to be squeezed at production fluctuates widely. Chil- (tons) 50 - times of world shortage, when dren and pregnant or nursing Food iosportn - - - 80 low-income countries need it most mothers bear the brunt when food 40 - (tont) - 'Food aid as - percentage of (during the 1973-74 food crisis, is short. Seasonal variations (less food importm - 60 food aid fell); and it can, if not food in the months immediately 30 - Middle- carefully handled, have effects on preceding harvests) and crop 20 - - 40 prices that discourage local pro- failures (because of weather or duction. pests) are the main supply-related 10 - - 20 Many countries (several low- causes of actual starvation. In income ones included) are pro- many low-income countries, 1961 63 65 67 69 71 73 75 77 ducing a larger share of their these conditions are an ever-pres- cereal requirements, but without ent threat to life. Yet the most com- necessarily improving nutrition mon cause of undernutrition is a for low-income groups or for those demand, not a supply, factora in expensive spot purchases, ship- in predominantly subsistence- straightforward lack of purchasing ping charges and storage costs. farming areas. In both low- and power. middle-income countries, the The structure of developing PRICE INSTABILITY. Grain prices countries' agricultural trade has have become less stable, primarily changed since 1973. Both agri- as a result of the pricing and trade cultural exports and food imports policies of the industrial market have risen rapidly in many cases, and nonmarket industrial econo- implying greater specialization in mies. These policies are mainly Figure 7.3 World grain imports, by country group, 1970 and 1980 production. While this increased designed to protect domestic pro- reliance on trade brings obvious ducers (see box on EEC agri- (percentage shares) gains, it also increases countries' cultural policy, page 33), but they 1970 = 109 million tons vulnerability to price fluctua- also insulate domestic consumers, tioriespecially when world food especially of livestock products, prices follow different cycles from from fluctuations in world food those of other agricultural pro- prices. Consumption in these ducts. countries is thus maintained, There are other costs as well. while the impact of any shortfall in The growth in international food world supplies falls on the con- trade has increased the complexity sumers of livestock products in of the world food market and other countries and on residual thus the cost of using relatively buyers, mainly poorer developing unsophisticated marketing meth- countries. When harvests fail in ods. World Bank studies indicate importing countriesas they did 1980 = 228 million tons that food imports cost developing in 1973-74, with a poor South countries almost $1 billion a year Asian monsoon and an excep- more than necessary in the late tional drought in the Sahel and the 1970s, due to poor forward plan- Horn of Africaany deterioration fling and market infrastructure, in global supplies greatly compli- and a neglect of mechanisms like cates efforts to prevent starvation. forward contfacts to reduce the Bangladesh suffered severe short- uncertainties of agricultural trade. ages and malnutrition in 1973-75, Added to these costs are those when its own food production associated with inadequate port was poor, the international market and other transport and storage was tight, and it had to find extra facilities; and poor or nonexistent foreign exchange to pay for more early warning systems, resulting expensive oil. 103 The indirect effects of such a catastrophes have, of course, been in the late 1960s and early 1970s in global shortfall may be equally man-made. Perhaps the most more than 20 countries show that serious. Food is generally so vital alarming recent examples have those directed at small farmers are that available foreign exchange been in Kampuchea and Somalia. just as cost-effective a way of will be allocated to importing it, Whenever armed conflict uproots increasing food supplies as proj- even if it means other imports many subsistence farmers, ects designed to benefit larger must be reduced. If these imports widespread starvation is virtually commercial farmers. Frequently, are needed for a country's trans- inevitable. The world's ability to they are even more efficient. port systemfuel or spare parts, respond, even to cases such as A further success has been the for examplethe indirect harm to these, has arguably improved, expansion of irrigation. In the low- agriculture may be considerable. especially by dint of resourceful income countries, the irrigated An importing country's own food action by international agencies area has expanded from 41 million production may be as vulnerable as and voluntary organizations. hectares in the early 1960s to its food imports, especially if a nearly 60 million hectares in the global food shortfall coincides Lessons from the 1970s late 1970s. The benefits of with the foreign exchange increased irrigation and storage pressures of an adjustment It would be wrong to suggest that capacity are most obvious at times period. In Sudan and Zambia, for there is no danger to food supplies of potential crisis. The 1979 example, successive budgetary at the global level. Particularly drought in India, which reduced cuts occasioned by foreign worrisome are the propensity for foodgrain production 17 percent exchange crises have left the market instability and the poten- below the previous year's record agricultural extension service, tial problems for developing coun- level, was as severe as in 1966, marketing agencies and farmers tries when world food prices rise. when famine was widespread, themselves without transport. Nevertheless, the world food and food prices rose 30 percent Inevitably, their food production crisis of 1973-74 now appears as a despite over 10 million tons of has then suffered. coincidence of misfortunes rather foodgrain imports. In dramatic than a harbinger of many more contrast, 1980 saw no widespread FOOD EMERGENCIES. Food-re- crises. There is less danger of famine. Foodgrain prices rose by lated disasters, like those of global shortages than of national only some 17 percent, causing less 1973-74, strike suddenly and with and local problems requiring both hardship in the rural areas than little warning. This sets a pre- national and international action; had occurred in 1966. This im- mium on flexibility, responsive- a failure by many countries to take provement was primarily a reflec- ness and good information if the advantage of their potential for tion of a higher average level of world is to maintain its food agricultural production and foodgrain production and, conse- security. Local crop shortages growth; and disruptive policies by quently, much higher levels of need not result in starvation if crop some developed countries. Sub- food stocks (see box on India, reporting is adequate and if the Saharan Africa in particular is in a page 80). administrative and logistical critical situation; 26 countries, One clear lesson of experience is capacity exists to respond quickly with a population exceeding 150 that the strategy for increasing to a crisis. Where that has been the million, are currently reporting agricultural productivity and caseas with Pakistan's recent food shortages. What are the alleviating rural poverty must response to the Afghan refugees causes of such failings and what be specific to local conditions. or Ethiopia's much-improved factors have prevented their Nevertheless, some problems are early warning system in the 1979 resolution? encountered quite generally: droughtrelatively few people There are areas where few have died for want of food. FOOD PRODUCTION. The out- techniques are available for raising Without reliable crop-reporting standing success of the 1970s has food production economically. systems, the extent of any possi- probably been the improved pro- This is particularly true in semi- ble shortfall becomes a matter of ductivity of small farmers. Their arid zones like the Sahel. With judgment, with the danger that extra output has been the key to only a limited area under irriga- the shortage is either exaggerated impressive growth in such coun- tion, management and rehabilita- or the response to it delayed, or tries as India, Indonesia and tion problems have been encoun- both. Malaysia. Audits of 80 World tered and many areas abandoned. Some of the world's worst food Bank-supported projects started In higher rainfall areas, the 104 technology (improved seed such as Mexico, Nigeria and came largely from increased out- varieties, fertilizer) is frequently Venezuela. put in the northwest; in the poorer available. But farmers are reluc- Inequitable land tenure southern and eastern parts of the tant to adopt innovations whose arrangements can both reduce country, there has been less reliability or effectiveness they incentives (when, for example, progress. At a minimum, an effec- (often rightly) doubt. Adaptive tenants do not receive the benefits tive distribution system is needed research is clearly a priority for of innovation and increased pro- to ensure that available food many countries. duction) and exclude the landless reaches groups in need. Infrastructural improvements poor from productive employ- In some cases, the aims of are urgently needed. Better roads, ment and higher incomes. national self-sufficiency and food in particular, would encourage The discrimination against security for poor households can internal trade and assist the diffu- farming goes beyond the incen- conflict. Countries that have en- sion of market information and tive system. Agricultural extension couraged import substitution of technical knowledge. services are frequently under- foodgrains (especially wheat) Many countries pursue pol- financed and inadequately staffed, have sometimes discriminated icies that discriminate against often as the result of neglect rather against the production of foods farmers. In every country, farmers than any deliberate intention to (cassava, millet, sorghum), which and particularly smallholders downgrade agriculture. have traditionally been produced require a credible framework of Many countries wanting to and consumed by poorer groups. incentives if they are to increase give priority to agriculture have In many West African countries, their output. Incentives depend not adopted appr.opriate strat- for example, the urban middle primarily on prices, but other fac- egies. Frequently this results from class has increased its consump- tors are also important. In many a failure to appreciate the potential tion of imported rice, partly countries, official prices exceed of the small farmer. Also, many because world prices have fallen world prices at official exchange projects directed at small farmers and partly because it is quicker to rates; yet delays in payment for have been overdesigned, exces- prepare than traditional foods. crops, and costly inefficiencies in sively complex and have not taken Almost all the West African coun- transport, storage and marketing adequate account of the exist- tries importing rice have therefore significantly reduce the prices ing farming system: the fact that sought to increase domestic pro- farmers actually receive. Food food crops are often grown by duction, but at costs well in excess prices in the free market com- women, for example, is frequently of import prices. monly exceed official prices, but overlooked. Stressing import substitution in are unstable and unpredictable foodgrains has sometimes caused and depend on private trade and SELF-SUFFICIENCY. How much neglect of other production distribution which is often offi- food to import and how much to opportunities, most obviously in cially discouraged. Government produce domestically is a key export crops. In some cases, domestic procurement and dis- strategic question. There is no encouraging export crops (like cot- tribution, on the other hand, is simple answer. But because of the ton and jute) may discourage food frequently inadequate to support perceived uncertainties about production, but there are also in- prices at harvest time, and a major global supplies, many countries stances where producing for. the drain on the budget and scarce (South Korea, for example) have two markets can be complemen- administrative resources. Erratic bought increased self-sufficiency tary. Also, perhaps more funda- import procurement can also at considerable economic cost. mentally, increases in incomes destabilize prices. And even when Others that could and should from export-crop production have farmers do increase their incomes, increase food production (see box enabled smallholders to improve there are often few consumer on Zambia, page 78) have failed to their nutrition. In yet other cases goods and services available in do so. (Colombia and Tunisia, for exam- rural areas. National food self-sufficiency ple) low food prices based on food Overvalued exchange rates, does not necessarily mean that aid have smothered the incen- export taxes and industrial protec- more food is available to the poor. tive to increase domestic food tion have tended to reduce real India, for example, became sub- production. agricultural incomes, a syndrome stantially self-sufficient in cereals typical of (but not exclusive to) oil- in the late 1970s. This achieve- FOOD DISTRIBUTION. Almost all and mineral-exporting economies ment, desirable though it was, countries have some form of sub- 105 sidized, publicly managed food rural areas as well. Food-for-work while the people at greatest nutri- distribution. Such schemes are programs and rural public works tional risk in isolated rural areas frequently the most effective way have had some success in reaching have hardly benefited at all. of reducing calorie and protein the rural poor; despite leakages to In many cases, there are better deficiencies among the poor who middlemen and other unintended and cheaper ways to get food buy food, especially those in beneficiaries, the distributed food to the poor. Some governments urban areas, and involve fewer still reaches hungry people. are experimenting with ration administrative burdens than other One danger of public food schemes and food stamp pro- fiscal outlays (see box). Buffer distribution is that it undermines grams, with eligibility depending stocks, financial support for pri- producer incentives; indeed there on income. Some experts would vate stockholding and official is a clear conflict between short- prefer to subsidize "self-targeting" price supports designed to term consumer interests (low commoditiesthose basic food- moderate the volatility of prices prices) and producer interests stuffs that are consumed mainly have encouraged farmers and (high prices). Since grain, for by the poor. But limiting subsidies reduced consumers' vulnerability. example, cannot be stored indefi- to the poorest people alone carries While these schemes are nitely, stocks must be turned over a risk of losing political support for generally aimed at keeping food regularly; where commercial subsidies of any kind. And much supplies reliable and cheap in markets are thin, this rotation has depends on the efficiency of mar- urban areas, some governments often disrupted the markets of keting and distribution systems. (notably in South Asia) have domestic producers. Incentives When, as in some African coun- attempted to extend them into for farmers have been reduced tries, the supply of subsidized food is limited, it tends to go to an increasingly small urban group and rarely to those who need it Food subsidies: three cases most. The political costs of The benefits and costs of food subsidy bans and numerous pricing and move- modifying these schemes may be schemes depend on several factors, ment interventions. Although these substantial. External assistance including the income level of benefici- systems are generally costly, the balance can play a role in smoothing the aries, the stage of development of the between their costs and benefits varies adjustment path when this entails country (particularly its agriculture) and greatly with the country, the coverage of the vulnerability of the scheme to budget a change in subsidy policy. the system, the choice of subsidized constraints. foodstuffs, eligibility criteria, purchasing Perspectives on the 1980s Food subsidies can contribute to a conditions and selection of ration shop vicious circle of declining producer incen- locations. There is no cause for compla- tives and budgetary pressure. In Zambia, In India, for example, where wheat, cency about the future. Foreign for example, officially controlled con- rice and coarse grains are sold in ration or sumer prices for food have risen more exchange and fiscal constraints in fair-price shops, public intervention slowly than other prices. From 1976 to seems an effective way of reaching the the developing countries are 1980, a period of severe economic crisis poor, despite the administrative increasingly severejust at a time (see box on Zambia, page 78), maize and difficulties. Increases in procurement when slow economic growth is fertilizer subsidies increased from 10 to 20 prices, to reflect rising import costs, have highlighting the need to maintain percent of the recurrent budget. Even so, been passed on to consumers. As a result, producer prices have been below import the subsidy has been kept within affordable food supplies to the prices. The subsidy has primarily manageable limits and budgetary poor. If they fear that the United benefited urban consumers, who are bet- pressures have posed little threat to its States might use its dominance in ter off than most farmers, especially those survival. the world grain market for politi- in remote areas. Weak producer-incen- S Several middle-income countries cal advantage, developing coun- tives in turn have reduced the amounts have succeeded in directly attacking marketed through official channels. A malnutrition through targeted food tries could feel forced to adopt black market has developed where con- distribution systems. Colombia's food costly import-substitution poli- sumers pay prices far higher than import coupon scheme, introduced in the cies. Political instability could con- prices. (ln 1981, however, the government mid-1970s, is modest in scale, reaching tinue to disrupt food production increased maize meal prices by over 30 about 140,000 households and costing and consumption in some of the percent and reduced subsidies.) less than 0.1 percent of the central govern- Food management in several South world's most vulnerable regions. ment's current spending. The coupons Asian countries features a complex of pro- are disbursed to farmers in poorer There are some positive fea- curement, storage, rationed distribution, regions and can be redeemed for a limited tures, however. The profitability commercial imports, food aid, export variety of protein-fortified foods. of agriculture is probably rela- tively insensitive to energy costs, 106 since agriculture is generally less tend to increase the instability of Population energy-intensive than many other world food prices. The EEC's industries (although fertilizer and Common Agricultural Policy is It took 35 years for the world's some irrigation systems will one candidate for reform; but the population to rise from 2 billion to reflect higher energy costs). The USSR and Japan also pursue 4 billion; the next 2 billion is likely industrial countries are increas- policies with similar effects on the to be added in only 25 years. Most ingly recognizing the fiscal developing countries. A new of that prospective growth is burden of agricultural protection. international wheat agreement alterable only between narrow They may be persuaded to im- with internationally coordinated limits. But the extent of progress prove developing countries' information on grain reserves in development during the rest of markets for certain products (beef, would also help stabilize markets. this century will make a major sugar) and reduce market insta- Enhanced food security. The difference to population growth in bility in grains. recently concluded Food Aid Con- the next. What happens between THE ROLE OF DEVELOPING COUN- vention helps to assure develop- now and 2000 will determine TRIES. The next 10 years thus pre- ing countries of imports when whether world population can domestic production is poor, but stabilize at about 8 billion in the sent an opportunity for long over- does not fully address the prob- twenty-first century, or carry on due reforms in agricultural policy. lem of price- and foreign-ex- growing more quickly to 11 billion The many governments that are change instability faced by low- or more. This will depend in part not now exploiting their countries' income countries. Such benefits on government actions during the resourcesand especially the adjustment periodin particular, latent productivity of small far- could come from the International mersshould reconsider their Monetary Fund's recent decision whether they can maintain and strategy. Improved incentives, to extend financial assistance to expand the programs that countries facing cereal import influence fertility decline. adaptive research, higher invest- costs temporarily above average, The reasons why world popula- ment, the elimination of ineffi- always assuming the money is tion is, as a minimum, going to cient marketing systems, the used to import extra food. double can be briefly stated. Mor- development of infrastructure tality is declining; current fertility and irrigationthese are among International assistance. the principal elements of a is high; the marriage age in While capital will still be needed developing countries is still low; strategy giving higher priority to for investment (especially in populations are young; and the agriculture. agricultural research and the number of women in, or about to Special attention should be paid costly areas of infrastructure and enter, the childbearing age group to food security. In rural areas, this water development), support will is growing rapidly. The lower limit implies not only raising food pro- increasingly be required for the to a "stationary population" is set duction but also reducing its cost reform of policies and programs. over the long term and improving by making an assumption about Where producer prices must be the earliest date at which fertility ways of reaching the most vulner- raised, to the potential dtriment able groups. In urban areas, it might decline to "replacement" of consumers, international assis- level. That level is defined as the implies the allocation of foreign tance (including food aid) can play exchange for food imports if number of births (about two an important role in ensuring that children per couple) at which a domestic supplies are insufficient; domestic pricing and subsidy and the use of various kinds of population will just reproduce policy contributes to greater food itself, given the level of mortality. government intervention to production and consumption by ensure that available food is Experience suggests that, in the poorest people. developing countries where fer- evenly shared. Disaster relief. An impressive tility is high and where couples INTERNATIONAL POLICY. There network of international and are currently having five or six are several areas where interna- voluntary agencies has done children, a level of two children tional policy could better support much to alleviate food calamities per couple is most unlikely to be national efforts at agricultural in many parts of the world. Their reached in less than 20 years. adjustments. efforts deserve recognition and How quickly replacement-level More open markets. Devel- support. Disaster relief (and food fertility is reached obviously oped countries should refrain aid) can remain effective if their affects the size of the ultimate sta- from protectionist policies that politicization is avoided. tionary population. For example, 107 if fertility in India were to decline lion growth for developing coun- to two children per couple in the Figure 7.5 Birth and death rates tries as a whole has passed its peak next 25 years, the population for selected country groups, 1950-95 from about 2.4 percent in 1965 would eventually stabilize at to 2.2 percent today. Only in Africa (numbers per thousand) about 1.37 billion (double its pre- has population growth accelerated sent level) some 40 to 50 years Industrial countries 50 in the 1970s. In these countries, from now. But if it takes 20 years fertility has declined very little longer to reach that fertility rate, 40 (indeed, in some countries, it has the stable population would be increased slightly) and mortality 300 million larger. 30 decline has not slowed down, at Similar calculations for Pakistan least until very recently. In some, (1979 population: 80 million) and 20 Bhr population is growing at close to Kenya (15 million) show that their the theoretical maximumnearly populations would reach 200 10 4 percent a year in Kenya, for Death rate million and 44 million, respec- example, a rate at which it will tively, with "replacement fertility" 0 I J I double in 18 years. achieved in 25 years, but 283 Middle-income countries A reduction of the birth rate 50 million and 87 million, respec- would take time to affect the size tively, if replacement fertility 40 of total population significantly. occurs only after 45 years. For But its effects on human develop- developing countries as a group, 30 ment spending would be felt more the same calculation puts the quickly. Calculations for Kenya eventual stationary population at 20 show that if the total fertility rate between 6.7 billion and 10.3 were gradually reduced from 8, its billion. This is a measure of the 10 present level, to 4 by the year urgency with which action to Death rate 2000, the population in that year achieve replacement fertility 0 would be 19 percent smaller than if should be pursued. Low-income Africa fertility were constant, but there 60 would be 28 percent fewer prim- Recent history ary school children. 50 In the low-income countries crude The pattern of fertility dedine birth rates fell from 45 to 37 per differs from country to country: 40 thousand between 1960 and 1979, culture, forms of social organiza- and death rates from 24 to 15 per tion, family structure and many 30 thousand; over the same period in other features peculiar to in- the middle-income countries, 20 dividual societies all play a part. birth rates fell from 41 to 34 per Yet recent research has also con- thousand, and death rates from 15 10 firmed some generalizations to 10 per thousand. These are all about the causes of slower popula- signs of remarkable progress 0 tion growth. Education; improved (Figure 7.5). However, in recent Low-income Asia health conditionsnot least im- years the decline in death rates has 60 proved nutritionthat increase been slowing down. In many children's chances of survival; countries campaigns against 50 urbanization; more employment specific diseases such as cholera opportunities, especially in the hrate and malaria have been the main 40 modern sector and especially for cause of falling death rates; further women: these are among the fac- 30 progress awaits improvements in tors most commonly related to fer- nutrition, education, health ser- tility decline in developing coun- 20 vices, water supply and sanita- tries. tion. In some developing coun- 10 tries, death rates are now hrat The poverty-population link approaching their lower limit. 0 These findings add up to one As a result, the rate of popula- 1950 55 60 65 70 75 80 85 90 95 central conclusion: poverty and 108 rapid population growth are inter- related. Attacking poverty (and its Family planning programs make a difference concomitants of poor health, lack Experience in three countries illustrates the women who might become pregnant of education and lack of status and the way developmenthigher incomes, practice contraception, a rate comparable job opportunities for women) is better education and literacy, life expec- to that of the United States-68 percent in tancy, improved nutritioncomple- 1976and significantly higher than that essential both for its own sake and ments family planning programs (see in other developing countries-23 per- because it slows down popula- figure). cent in India, 41 percent in Sri Lanka and tion growth. Conversely, rapid 46 percent in Colombia. population growth contributes to Human development indicators: Until recently, 28 was the recom- poverty. A poor family often China, Indonesia, Brazil mended marriage age for men and 25 for sees additional children as women in cities, 25 and 23 in the Chirsa countryside. In Guangdong, Jiangsu, economically beneficialand Pe,ceiitageor cite per tI,or,,a,rd De)lurs Hebei and Shanghai, more than three- 100 2,000 indeed to the family they may be. quarters of all marriages in the 1970s were But they contribute to a growing 50 / Net primary srhool at the recommended ages. pool of labor which, in a poor enrollment rate 1,500 Women receive paid vacations after (percentage) undergoing sterilization and abortion. In country, is hard to educate, house, 60 Literacy rate some provinces, couples pledging to have keep healthy and provide with (prtrrntage) 1,000 only one child receive financial allow- capital to raise productivity and 40 Crude birth rate (per thrusand) ances and priority in education, employ- employment. While growing / ment and housing. Couples having more 500 labor forces contribute to higher 20 than two children are penalized. Disin- total output, in conditions where centives are mostly socialthe com- munity disapproves of those who do not other resources are scarce and 0 conform to the birth planning policies. underemployment widespread, 100 Indonesia 2,000 Other factors increased the program's they do not raise, and often effectiveness. The high life expectancy in diminish, the average output of 50 China and the low infant-mortality rate 1,500 (about 56 per thousand) reduced the need labor and consequently average for more children. Nearly universal pri- incomes. 60 mary education of women changed at- While rapid economic growth 1,000 titudes about family size and increased helps slow down population 40 contraceptive use. growth, the availability of family In Indonesia, the crude birth rate fell 500 20 from 41 in 1970 to 36 in 1979. A family planning services is also impor- planning program reached the lower tant (see box). Effective family socioeconomic groups and women with planning programs both convey Brazil fewer children. The Indonesian program the message that family size is a 100 2,000 is directed centrally, but implemented matter of choice, and provide the locally. Traditional community councils so (banjars) and community pressures pro- means to make the choice effec- Literacy tote 1,500 mote family planning. The results are percee tag,) tive. There is now widespread impressivein Bali, nearly 49 percent of 60 agreement that appropriate forms Nrt primary srhool eligible couples used contraceptives in enrntlmnnt rate 1,000 of social and economic change and 40 (percentage) 1979-80, compared with a national rate of the diffusion of the means of birth Crode birth rate 27 percent. (per thousand) By contrast, in Brazil official support control are both necessary to 20 Income per capita 500 for family planning is not strong. Despite (dollars) reduce fertility. rapid economic growth, Brazil's popula- In the countries where the great tion growth rate remained at 2.2 percent a 1955 so 65 70 75 so majority of the developing world's year in 1970-79. Brazil is substantially population lives, some progress is richer than China, but the benefits of its being made. In other developing China's crude birth rate declined from economic growth, including health, 34 in 1957 to 18 in 1979, and the population nutrition and education, have been countries, fertility is declining growth rate was only about 1.2 percent a spread less widely. Brazil consistently faster today than it did in the year in 1980. The official family planning falls below the world norm relating industrial countries when they program was started in 1956, but only income levels to indicators of health and were going through their acquired impetus in the early 1970s, with education. Although fertility has recently the introduction of free contraceptives, declined it is still higher than in China, as demographic transition in the delayed marriages, quotas, peer pres- well as in Sri Lanka, another low-income nineteenth and early twentieth sures and economic incentives and disin- country which has encouraged family centuries. In countries where fer- centives. The result: about 70 percent of planning. tility began to decline at the end of 109 the nineteenth century (such as precisely those aspects of devel- populous country, because of Britain, Austria, Italy, the Nether- opment in low-income countries China's needsan invidious lands and the United States) it most conducive to poverty allevia- choice thrust on it by inadequate took about 50 years for crude birth tion. Cutting nonsalary recurrent funding. rates to fall from 35 to 20 per thou- expenditures, in particular, can International assistance could sand, an average decline of about damage these programs seriously protect and expand these pro- 0.3 per thousand a year. Countries while saving little. Cuts, when grams in the difficult environment such as Chile, Sri Lanka and unavoidable, can and should be of the 1980sby financing non- Malaysia, which in the early 1960s made in ways that minimize the salary recurrent expenditures had crude birth rates of about 35 damage. and by assuring food supplies per thousand, have since then Many valuable human develop- to poor countries, particularly reduced them at a rate of 0.5 to 1.0 ment-related initiatives such as to support the reform of agricul- per thousand a year. biomedical research on reproduc- tural policies. tion, contraceptive development Aid will continue to be critical The role of external assistance and health and family planning for broad programs of human de- projects now languish for lack of velopment. To future generations The pressures of adjustment, support. The United Nations who inherit an overcrowded and especially budgetary stringency, Fund for Population Activities undernourished earth, any dere- could lead governments to cut (UNFPA), for example, is cutting liction on the part of the present back on human development pro- its family planning assistance to generation will appear short- grams. This could compromise India, the world's second most sighted, indeed irresponsible. 110 8 Overview The main theme of this Report has The nature of interdependence new centers of manufacturing and been adjustment, both global and technological innovation. The national, to promote sustainable Interdependence is not a new fact developing countries are pro- growth in the world economy. It or a new idea. It has been given jected to contribute over a quarter has described the interplay be- prominence in a number of recent of the increase in world produc- tween national and international reports and studies, notably those tion between 1980 and 1990, bring- policies and their effects on of the Brandt Commission, and ing their share of the total to 20 development. This last chapter OECD's Interfutures project. In percent, compared with only 15 summarizes the principal findings the 1930s, countries learned how percent in 1970. and policy implications, bringing trade restrictions and competitive The developing countries out some features of interdepen- devaluations aimed at securing play an increasingly important dence both among different national advantage could quickly role in world trade. They will groups of countries and among cause universal harm. The institu- account for nearly 30 percent of issues. tions and procedures established the increase in world trade be- The international environment after the second world warthe tween 1980 and 1990. They pur- is most powerfully shaped by the World Bank and International chase 38 percent of EEC exports behavior of the industrial coun- Monetary Fund, the GATT, the outside the Community; of this tries and the main oil exporters. United Nations agencieswere total, half are purchased by oil- These countries today have a designed to create an environ- exporting countries and half by mutual recognition of each other's ment for liberal trade and to pro- oil-importing countries. The interestsand, increasingly, of mote international economic United States sells 36 percent of its the way their interests overlap cooperation. Under their in- exports to developing countries; a with those of developing coun- fluence, the world economy third of these go to the oil-export- tries, especially the better-off expanded rapidly, especially in ing and two-thirds to the oil- among them. the 1950s and 1960s. International importing countries. For Japan the It is the poor countries that trade has grown still faster. Even relevant figures are 46 percent to emerge so vividly in this Report under the strains of the 1970s the developing countries, with 14 per- as being left behind by world industrial countries refrained cent going to oil exporters and 32 growth, and facing a further dete- from trade measures which might percent going to oil importers. In rioration in their prospects. They have incurred retaliation. manufactures trade as a whole, remain on the periphery of the Interdependence has been the industrial market economies expanding trade and financial given new meanings in the years had a surplus of $34.5 billion with links among industrial, oil-export- since 1945. the developing countries in 1978. ing and middle-income countries. The number of sovereign The developing countries Nevertheless, in some sectors, states has increased threefold, increasingly act as an "engine of and especially if longer-term making the task of international growth" for the rest of the world. trends are considered, the richer cooperation both more necessary While the main transmission of countries have strong reasons for and more difficult. economic activity is still from the intensifying their cooperation The growth of the semi- industrial to the developing coun- with the poorer ones as well. industrial countries has created tries, the reverse effects are not 111 negligible. Some estimates sug- tries. This in turn would reduce development is still difficult. In gest that an extra percentage point the ability of developing countries many countries, domestic policies on the growth rate of developing to borrow, to grow, and to import and performance had left much to countries would raise industrial from the industrialized world. No be desired long before the external countries' growth by about 0.1 to group of countries would gain; all climate deteriorated. In several 0.2 percent. Another study calcu- would lose from slower growth. countries trade and foreign lated that, by sustaining their Similarly, the pricing and produc- exchange policies, for example, imports in the mid-1970s while the tion decisions of the capital- have harmed the chances of rest of the world's slowed down, surplus oil exporters, together manufacturing growth; sub- the middle-income countries had with their internal development Saharan Africa has had a par- an impact on the industrial coun- and its effects on their imports and ticularly poor agricultural record. tries equivalent to a significant their lending, will strongly in- Nevertheless the international reflation of the economy of the fluence the world economy. environment has had a major Federal Republic of Germany. Growth in the 1980s will proba- influence on their progress. Fluc- They prevented the recession in bly be somewhat slower than was tuating commodity prices have the industrial world from becom- feasible in the era of cheap energy; affected domestic policies, entic- ing even worse than it was. but concerted efforts to ease ing several countries into short- Banking links have become bottlenecksof energy, finance, lived investment booms that have closer. The Report has dwelt on the skills, food and raw materials had to be followed by drastic role of trade and finance in mak- will help to ensure that even the economies in current and capital ing international payments for slowest-growing countries of the spending. And oil-importing energy. The health of international 1960s and 1970s can make greater countries had to cope with banking, with its growing progress. depressed markets for their exposure in the middle-income In energy and food in particular, exports, and deteriorating terms countries, depends on those all countries share an interest in of trade in the mid-1970s which countries' export prospects to a far raising production in developing were only partly due to the higher greater degree than it did a decade countries: here there is coin- cost of imported oil. ago. In addition, Far Eastern, cidence between the concerns of A number of the middle-income Latin American and Arab banks industrial and low-income oil importers managed to sustain now have significant roles in the developing countries, as well as growth in the 1970sthey were world banking system. those of the middle-income coun- able to increase their exports, Though interdependence has tries. Population growth also, reduce imports and borrow large strengthened the ties between which is intimately linked to amounts of commercial capital. industrial and developing coun- development, will affect all coun- For that growth to continue, the tries, a particular responsibility tries. Wherever it occurs, it puts markets they sell to must remain for global prosperity rests on the pressure not only on world open and continue to expand. In industrial countries. Their growth demand for food and energy, but addition, the countries them- depends on their ability to master on the environmentair, soil and selves will have to continue to domestic macroeconomic prob- oceansand all exhaustible seek out new products and new lems, to curb inflation, raise resources. Ultimately, the future markets. Commercial borrowing investment and productivity, and of humanity is at stake in the is expected to go on rising; become more economical in their progress of development in the however, not all countries bor- use of energy. coming decades. rowed equally wisely, and some None of these tasks is made now face short-term liquidity con- more difficult by the dynamic Developing countries in the 1970s straints. effects of international trade on and 1980s Among the low-income coun- their own economies; on the con- tries the record has varied. For trary. Imports from developing The importance of the developing most slower growth was the rule. countries help them to contain countries' own policies emerges Without finance to cover current inflation. If the industrial coun- clearly in this Report. Ex- account deficits, and with little tries were to become more protec- periencenot least that of the capacity to increase exports in the tionist, they would reduce the more populous oil-exporting short-run, they found the tighter exports and thus the creditworthi- countriesshows that even when external environment difficult. ness of many developing coun- external conditions are favorable, Immediately after the first round 112 of oil-price increases, aidinclud- difficult decade adjusting to such savings, improving the efficiency ing that from OPEC countries conditions. They must reduce of the use of capitalalso assist expanded considerably. But this their present balance-of-pay- adjustment. The same is true of all expansion did not continue. The ments deficits to sustainable policies that help to switch African countries had the slowest levels. Ultimately adjustment resources efficiently into tradeable growth, most frequently from requires shifts in trade, domestic goods and import substitutes. In domestic rather than external production and consumption; fact in the poorest countries it is causes; their GNP per person rose borrowing is a necessary instru- hard to distinguish between by only 0.5 percent a year in the ment for investment to accelerate adjustment and development 1970s. In several countries per growth, and for gaining time for because so many of their problems capita incomes and food produc- adjustment to take place. But stem from internal circumstances. tion actually fell. South Asia fared countries that have borrowed to When, on top of all their han- somewhat better, assisted by support unsustainable patterns of dicaps, the external environment workers' remittances, several production, consumption and deteriorates, the poorest countries years of good harvests, and com- trade soon face the reckoning of suffer acute hardship. The task of pared with the African countries, excessive debt and forced macro- remedying their long-standing a relatively satisfactory record of economic contraction. deficiencies becomes more impor- domestic economic management In the Report's comparative tant than ever. and greater freedom from war and analysis of countries, little statisti- civil strife. cal relationship was found be- Human development The 1980s began with a worsen- tween the magnitudes of external Human development programs ing of external conditions for the shocks in the mid-1970s and sub- are threatened by the austerity oil importers. Recession in the sequent rates of economic growth inevitable during a period of industrial countries has reduced compared with the past; but this adjustment. However they pro- their export prospects; current does not at all mean that external vide the essential skills for long- account deficits have increased in conditions are unimportant. As term development, so govern- the past two years, this time by noted, in the mid-1970s additional ments need to be especially care- amounts closely matched by the capital was forthcoming for low- ful to avoid indiscriminate cuts. increases in their oil import bills. and middle-income countries; This places a premium on pursu- There can be some confidence in expanded trade was also impor- ing the programs efficiently, on growth expectations for most mid- tant for the middle-income coun- finding ways to cut costs, and on dle-income countries once recov- tries. spreading the benefits as widely ery begins in the industrial world, The analysis showed that the as possible. External assistance but the outlook for low-income effect of external changes also has a valuable role to play in pro- countries is unpromising. depends a great deal on domestic vidmg financial and technical sup - There is no sign of current or policy responses and basic port in times of difficulty. future aid increases comparable to economic structure. It indicated Food and nutritional problems those which helped them through above all the value of an outward seldom derive from global food the mid-1970s. Workers' remit- orientation, which makes coun- shortfalls; more often from local tances will grow more slowly. Few tries more rather than less able to and seasonal supply variations, will have easier access to commer- cope with the external environ- poor distribution systems, and a cial borrowing, nor will there be ment. Export expansion is not lack of effective demand. The any rapid improvement in their equally easy for all countries underlying cause of hunger and export earnings. Adjustment by low-income countries with one or malnutrition is that those who slower growth is likely to become two exportable commodities and need food do not have the money more common. Only their own modest manufacturing capacity to buy it. In food as in energy, the domestic efforts combined with obviously have less room for most intractable policy problems increased aid can change the maneuver. Efficient import- arise from the conflict between the prospect of balance-of-payments substitution, reflecting interna- desirability of high prices as pro- crises and acute financial strin- tional scarcities and comparative ducer incentives (and as curbs on gency early in the decade. advantage, is also an important consumption, in the case of part of outward orientation. energy), and their undesirability National adjustment: the oil importers Policies that favor development to poor people buying food and Most developing countries face a and growthraising domestic fuel. Countries have tried various 113 solutions, some successfully exports) are often the opposite of oil and other imports. It is a story but there are no easy ways out. what is needed in the longer run; partly of their difficulty in expand- Today's population pressures and the close fiscal ties between ing their supply of competitive are the legacy of inadequate the oil sector and governments exports, and partly of the obsta- development in the middle of this make it easy to expand public cles to trade and low rate of century. So, too, the heightened expenditure and investment, growth in their export markets. pressures of the twenty-first cen- which in many cases ought rather Most of these countries still tury will reflect today's failures. to be curbed. Excessive invest- depend heavily on commodities, Except in an initial phase when ment, not always in projects with with little potential for exploiting mortality falls before fertility high returns, recalls the problems the rapid growth in demand for decline follows, rapid population of other countries experiencing manufactures. But even within growth results from failed commodity booms. The oil boom commodities, the low-income developmentfailed human is longer-lived, but for most pro- countries' export prices have been development in particular. The ducers, not more than one or two eroded more than those of the response required is active promo- decades at current rates of produc- middle-income countries. Lack of tion of those features of develop- tion and consumption. flexibility and adverse supply con- ment associated with fertility Few of these countries have yet ditionsranging all the way from declineeducation, improved found a development strategy that inadequate infrastructure causing health, advancement of women, promises not only industrial high costs to ill-advised export- modern-sector employment growth, but improved rural taxation policies reducing pro- and family planning programs. development, expanded employ- ducers' incentivesplay a signifi- All these are at risk from the ment and redistribution of cant part. budget cuts made likely during incomes, the provision of basic It seems natural for the original adjustment in the 1980s. services to the poor and limitation producers to go in for process- of population growththe only ing and gain a larger share of the Oil exporters path to lasting prosperity. Unlike final value of goods made from For the oil-exporting developing the low-income countries, the oil their raw materials. Yet they are countries the rise in oil prices has exporters are much less hampered prevented from doing so by a obviously been a boon, but it has by shortage of financial resources combination of international and not by any means solved their to achieve these goals. domestic factors. Internationally, development problems. Greater escalating tariffs confront suc- ease in the balance of payments Global adjustment cessively "higher" stages of pro- and capacity to borrow has duction. However, the low- resulted. But many of these are The experience of the 1970s points income countries have had the large countries with large, rapidly to numerous lessons for develop- smallest share of such increases in growing populationsIndonesia, ment in the 1980s. The interna- exports as have been achieved. Nigeria, Mexicoand all the tional environment can comple- The reasons include marketing other problems faced by most ment or thwart domestic efforts; in conditions; technical and other developing countries, not least, a this Report that environment is considerations which make proc- considerable presence of poverty. described under three main sub- essing at source more rather than The key policy need is to use oil jects: trade, energy and interna- less expensive for some com- revenues efficiently for making tional capital flows. modities; and more general condi- the transition to durable long- tions of industrial efficiency. Proc- term growth. A factor in this will Trade essing is an industrial activity. It be domestic energy pricing itself; For developing and developed appears to be more efficient where domestic consumptionoften countries alike trade has a crucial manufacturing in general is more subsidizedis currently growing role in growth and adjustment. broadly established. so fast as to cut into future oil The failure of the low-income An industrial base is obviously exports. Policies must be found to countries to participate in the even more important for estab- improve incentives for investment expansion of world trade is a prin- lishing exports of manufactures. in manufacturing and agriculture. cipal reason for their disappoint- However, even where there are The signals to the domestic econ- ing performance in the 1970s. modern and potentially competi- omy given by exchange rate Their exports have not grown fast tive manufacturing enterprises in appreciation (caused by oil enough to match the rising cost of low-income countries, their 114 export performance is frequently on balance over the 1970s the jury" in the safeguards code might hampered by inappropriate fiscal international trading system did be expanded into a net concept, policies and foreign-exchange not become less open. An in- including consumer gains; cur- regimes. At the same time, the creased share of developing coun- rently, it includes only producer would-be exporter often faces pro- tries' trade with the industrial losses.) The heavy costs of protec- tection or the threat of protection, countries came under one sort or tion are rarely brought to public which inhibits investment and another of governmental notice, and the political sensitivity leaves the field to those who can "scrutiny" that was harmful to to possible loss of employment better afford to take risks. some countries or products, but a through competitive imports is This appears to be saying that similar share came under various acute while employment gains success breeds success. It does. trade-creating arrangements, from exports play a smaller part in But that is also inherent in the such as the GSP and offshore government decisions. process of development; though it assembly provisions, which The prospects for the 1980s are can happen, modernization and brought benefits to others. The mixed. The economies of the mid- efficiency do not usually tend to danger in recent trends in han- dle-income countries will con- break out in a single sector while dling trade policy issues stems tinue to expand rapidly if the trade the rest of the economy is back- from the increasing politicization environment remains as open as it ward. Rather, the gradual im- of trade, which increases the risk is now. Their export expansion has provement of physical and human that protection will take hold. resulted more from their own capital leads eventually to a point The most stringent remaining "push" than from the "pull" of where growth can accelerate. With industrial-country import barriers world markets, and they have well-designed policies, this broad are on agricultural products, pro- demonstrated considerable development can be accom- cessed materials and textiles. capacity to diversify. Their panied, not just followed, by Developing countries tend to pro- economies are becoming large exports of manufactures. Such tect the same sectors as do th enough to support economies of was the case in a number of mid- industrial countries, so their trade scaleparticularly if they "open dle-income countries which were with each other is similarly up" to each other. poor themselves only two decades limited. Nonetheless, trade The low-income countries face a ago. The condition of the low- among developing countries has more difficult future. A few income countries is not immutable. expandedmainly between and negotiated agreements have But the findings do imply that to the benefit of countries that brought them some modest international measures to improve have adopted more outward- benefits; but more rapid advance the trading prospects of develop- oriented, nondiscriminatory trade will depend considerably on their ing countries will tend to benefit policies. further development and policies most the more advanced among During the 1970s, the world toward exporting sectors. them. The implication is not that groped for ways to tackle the Experience shows that agricul- such measures are without merit remaining trade barriers. The ture-based countries can, with in their own right; on the contrary, nontariff codes negotiated in the proper incentive policies, diver- reduction of trade barriers and Tokyo Round are a beginning, but sify production and make valua- other trade-enhancing measures they are only a framework: one ble export gains. One possible are importantboth to develop- that can guide the development of area for exploration is "affirmative ing and developed countries. But suitable approaches but cannot action" by the capital-surplus oil the main lesson for most low- provide the resolve or the political exporters to purchase more of income countries is that the dynamic needed. That dynamic their imports from developing expansion and openness of will have to come from the countries generally, and the low- markets are important as permis- individual countries themselves, income countries in particular. sive factors, but ones that will not through their decisions to make A major determinant of trade soon yield a major source of the adjustments needed to restore prospects for developing coun- growth, except for those few with their own growth. This would be tries is whether or not the established manufacturing sec- facilitated by building the gains industrial countries maintain a tors, unless their development from trade into domestic and reasonable rate of economic simultaneously advances in other international decision processes. growth and of employment. But directions. At present the "costs" are given far the effects run in both directions: Despite a number of problems, more weight. (Particularly, "in- there are gains from trade which 115 contribute to efficiency and will gradually replace oil as the more urgent than the steps growth. Indeed, the choice for the world's main source of energy necessary to put its use on a sus- industrial countries is not to growth. Later, a significant tainable basis. adjust or protect; the choice is increase in nuclear and synthetic The energy market is a global grow or protect. fuels may also be expected. The one; the development of addi- speed of these demand and sup- tional energy supplies anywhere Energy ply adjustments implies a con- brings benefits to all countries. tinued increase in real energy There is thus a strong incentive for The pattern of energy use before prices, averaging some 3 percent a all parties to help boost energy the oil-price rise in 1973 was year between 1980 and 1990, production in developing coun- unsustainable. When the con- though year-to-year changes will tries. Higher oil production in sumption of oil began to grow inevitably be erratic. these countries could take faster than additions to reserves, To date the energy transition pressure off international the stage was set for higher prices has been managed relatively markets, in addition to diversify- even without deliberate action smoothly in the oil-importing ing sources of world supply; by the oil-exporting countries. developing countries, whose expansion of other energy sources Although the adjustment to growth path was not substantially reduces the demand for oil. No higher prices has not been disrupted in the mid-1970s. A investments show a greater coinci- smooth, their effects have already variety of factors combine to make dence of the economic and stra- been marked. In the industrial the outlook for their continued tegic interests of the developed countries, growth of consumption progress more difficult in the and developing countries. has slowed. The amount of energy 1980s. Reflecting the impact of used for a unit of production has higher oil import prices and lower International cooperation is fallen significantly and is expected exports, balance-of-payments needed to promote this energy to fall further as further adjust- deficits have risen to levels which development. Considerable ments are made. In developing cannot be sustained for long. The resources are called for, and must countries energy intensities can- effects of higher domestic energy come from the industrial coun- not be expected to decline at all prices are also now being felt. In tries and the capital-surplus oil soongiven their growing need some energy-intensive sectors, exporters. The Report has argued for commercial energy as develop- such as manufacturing and that there are good reasons why ment, urbanization, and the transport, they could be pro- international financial institutions transformation of industry and nounced. should play a significant part in agriculture all take placeeven if However, there is little indica- this process, borrowing in private energy efficiency improves, as it tion that, on their own, higher capital markets for the purpose. can. energy prices will prevent Such measures would serve the Comparable adjustments on the industrialization and a resump- triple function of promoting supply side will also take place to tion of faster growth. There will be development, easing energy ease energy bottlenecks in the some changes in comparative markets and recycling capital. coming decade. Investments in advantage, and slower growth in The other main components of energy developmentwhich the transition period. Policies to adjustment in energy require because of the long lead times increase domestic energy supplies actions from all oil exporters and made little contribution to adjust- and to plan for efficient energy use from the industrial countries. It is ment in the past decadeare now will ease this transition. widely agreed that there is a need coming to fruition. In the 1980s For many poor countries the for oil exporters to pursue more changes in the composition of energy problem is the fuelwood stable price policies. Price, supplies are expected to be as crisis and spreading deforesta- however, depends on both supply important as changes in demand. tion. It is a problem with wide and demand, and year-to-year While oil provided more than 60 ramifications: it affects not only fluctuations cannot be avoided. percent of the additional energy their own physical environment Since the largest share of demand supply in the 1960s, in the 1980s its and ecology, but that of the world comes from the industrial coun- incremental contribution will be as a whole and its climate. Fuel- tries, it is important that they con- about one quarter. Production of wood today represents one quar- tinue their own efforts to save coal is expected to grow twice as ter of developing country energy energy and develop alternatives to fast as that of oil in the 1980s. Coal consumption, and few tasks are oil. 116 Capital flows problems has, however, rent attitude of some industrial Borrowing by developing coun- increased, at a time when the countries toward development tries has always been an important banks may be beginning to be assistance may limit the capacity source of balance-of-payments somewhat constrained for one of the multilateral institutions to support, permitting higher levels reason or another: the balance of play a larger role in concessional of imports and domestic invest- domestic and foreign loans in lending. And, mainly for political ment to accelerate growth. In the their portfolios, country-exposure reasons, a large share of official aid 1970s, borrowing also served the limits, national regulation, risk goes to middle-income, not low- crucial purpose of giving time for perception or capital-asset ratios. income countries. countries to adjust to changed The composition of borrowers For the low-income countries, conditions. It helped considerably and lenders may well change, the adjustment problem described to limit the immediate impact of but the private capital market is in this Report has no short-term terms-of-trade losses. The inter- expected to continue to play a solution. Apart from immediate national capital market recycled major role in recycling funds balance-of-payments needs, the the OPEC surpluses efficiently, from the surplus to the deficit longer-term tasks of investment particularly to middle-income countries. and restructuring will require a developing countries. Bilateral Nonetheless, there will be a decade or more of increased sup- and multilateral aid agencies re- need for national governments port with concessional funds. The sponded well, at least at first, to and international financial institu- time-scale is even longer for the the immediate needs of many low- tions to bear a larger share of the very poorest countries, where income countries. Remittances overall flow of recycled funds. The the essential foundations of eco- from migrant workers in the Gulf latter in particular can assist in nomic developmentinfrastruc- States also helped. The second lengthening maturities, in coor- ture, human capital, commercial round of oil-price rises in 1979-80, dinating capital flows with adjust- networks, and effective adminis- however, has been accommodated ment needs and in cooperating trative capacity at all levelsare with the help of short-term bor- with commercial capital markets. not yet in place. rowing and use of reserves to a Recycling would require less degree which is not viable for very international support if the capi- Agenda for growth long. tal-surplus countries were to buy more from developing countries, The Report has described how The projections in this Report and to lend and invest more in adjustment may take place inter- indicate the continuing need for them directly. Banks and develop- nationally and nationally with the substantial external finance ment agencies of the capital- least damage to continuing devel- commercial loans for the better- surplus countries show signs of opment objectives. A summary of off countries, and (mainly) con- expanding their direct financing. the results may be found in the cessional loans and grants for the In the same way that they have Report's two projected scenarios poorer countries. For the better- moved to take a larger share of the for 1980-90. Under the High case, off, high interest rates will profits of selling oil, it may well the middle-income countries increase capital requirements if appeal to them in the course of grow at 5.6 percent annually in the there is to be a substantial net time to take a larger share of the 1980s, the low-income countries at transfer, and shorter maturities will profits currently accruing to banks 4.1 percent; under the Low case, call for more frequent refinancing. in the industrial countries which they manage only 4.3 percent and The international capital market borrow and on-lend oil revenues, 3.0 percent respectively. is capable of providing much of if they are willing also to assume The difference between the the required external finance. the management costs and bear scenarios is not just one of growth Commercial banks have had a the risks. rates, but a fundamental smaller proportion of bad debts in It is harder to see how the needs difference of outlook. In the High their lending to developing coun- of the low-income countries will case, poverty is steadily pushed tries than to industrial countries. be met. The prospects for bilateral back in developing countries; As a group, developing countries official aid are mixed, with some world trade expands considera- are no less creditworthy today donor countries improving their bly; overall adjustment in the than they were a decade ago. The performance, others cutting back. world economy is made easier. In number of middle-income coun- The nonmarket countries are still the Low case, economic develop- tries with short-term liquidity insignificant aid donors. The cur- ment slows down and poverty 117 affects ever-larger numbers of people. By the end of this century, Adjustment mechanisms the difference between the two Countries Trade Energy Capital flows cases amounts to some 220 million more absolutely poor people. Oil- Expand exports, Raise internal Borrow to cover importing including diver- prices to encourage balance-of-pay- The main requirements to reach developing sification of agri- production and ments deficits and the higher scenario are not countries cultural exports, conservation invest for struc- excessively demanding. and adequate tural adjustment Industrial economies have to incentives for Expand energy exporters supplies grow 0.3 percentage points a year faster in 1980-90 than they did in Import substitution 1970-80. That means their in line with inter- approaching 4 percent average national prices annual growth in the second half Capital- Expand imports, Stabilize price Increase aid to of the 1980s. surplus especially from policy poor countries Combined with this higher oil developing growth, industrial countries exporters countries Support assistance Increase direct for developing lending and invest- should refrain from imposing any countries' energy ment in develop- additional trade barriers; oil- production ing countries importing developing countries' exports could then grow at rates Industrial Expand imports Conserve energy Increase aid to countries from developing poor countries comparable to those of the 1970s. countries Switch to alterna- The measures described to tive energy sources Support recycling achieve a global balance between Avoid protection demand and supply for energy and make positive Support assistance adjustments to for developing should result in an annual real expand trade countries' energy increase in oil prices of no more production than 3 percent over the decade as a whole. Interna- Measures to International finan- International finan- tional improve poor cial institutions cial institutions Aid to low-income countries policies countries' gains assist developing allocate aid to should increase. Either industrial from trade countries' energy poorest countries countries must increase their aid production and support steadily and couple this with a recycling considerable reallocation to low- income countries; or they must raise their aid more substantially (keeping the same distribution between low- and middle-income maintain growth ratesthis will analysis of adjustment in the 1970s countries). Either way, the low- be assisted by the adjustment and a better understanding of the income countries need to receive mechanisms. The task of adjust- workings of the world economy. some $4 billion a year more (in ment is made easier for each group In particular there will be more 1980 dollars) than they do in the of countries by complementary realistic expectations about the Low case. actions in energy markets, capital role and price of energy: the Developing countries should flows and trade, rather than by general dimensions of the energy maintain their domestic savings exclusive reliance on any one of transition are now accepted on all rates at least at 1980 levels and them. Similarly, in each area of sides. With reasonable manage- improve the efficiency of their use policy the actions of the main ment, adjustment need not be of capital. groups of countries need a degree harder in the next decade than in The various policies needed to of consistency. the last. ensure that adjustment is accom- Policy making in the 1980s may The experience of the past seven panied by rapid growth are seem more difficult than in the years shows that to a large extent stylized in the tableau (see box). l970s. There may, however, be the direction and coordination of Each group of countries has to some compensating advantage in adjustment policies can be guided invest efficiently and raise or the knowledge derived from by price signals resulting from 118 national action. Nevertheless, means or another, if poverty is to growth that this Report judges to there are several areas in which be attacked. Most of the other be attainable will provide the governmental action and interna- global policy requirements are in resources to tackle poverty tional negotiation is needed to the joint interests of all countries; directly. People and governments reinforce existing institutional insofar as aid is used for investing in developing countries must play arrangements and to supplement in energy and food production in their part in ensuring that this markets. A number of these have low-income countries, even that happens. Poor people must be been discussed in the Report. The rebounds to the donors' benefit. reached by the education and most important for the poor coun- The expansion of world trade will health programs that have equip- tries is an increase in capital flows also benefit all countries; and the ped others to raise their incomes, on concessional terms; they have assurance of recycling will live longer lives and fulfill their no alternative form of adjustment forestall unnecessary contraction potential. The slower economies except to slow down growth. in global demand. grow, the greater the risk that Major responsibilities lie with The difficult world environ- those programs will be sacrificed developing countries for improv- ment of the 1980s may make it all for lack of finance. The vicious cir- ing domestic performance. too easy to lose sight of the pur- cle of poverty and slow growth Simultaneously, the richer coun- poses of economic development. will then be drawn round another tries of the world must tackle the The most urgent of them is to generation. That is the price of necessity of higher aid levels for further the struggle against failure. It is a price that need not be low-income countries by one poverty. The faster economic paid. 119 Technical appendix Chapter 3 (1) Q8 (P8 - P7) "Volume component" is measured V8 - V7 by In this chapter, Tables 3.1, 3.2, 3.3, 3.4 and 3.7 are based on World which shows that the numerator is fC8 V7\ V7 Bank data. Most of the variables the price change multiplied by the C7 D7) D7. used in the tables are familiar con- 1980 export volume. The relative export price corn po- ceptslike prices, volumes and Export purchasing power in Tables nent is the difference between the shares. There are however a few 3.2, 3.3 and Ti and T2 is, as total change and the volume com- less familiar variables whose explained in the text, the dollar ponent, which comes to operational definitions should be value of a country group's export presented. receipts deflated by the export V8/C8V7 price index of industrial countries. D8 C7 D7 Variable definitions The 1970 to 1980 increase of export Making again the conceptual The numerator of higher prices as a purchasing power is then divided substitutions of P times Q for percentage of increase of value in into a volume component and a values and of Qs for volumes, (2) Table 3.1 is the amount by which relative export price component. The and (3) can be transformed so as to the 1970-80 inflation of the price volume component measures the bring out their intuitive meaning, level (in US dollars) increases the effect on export purchasing power into dollar value of the 1980 export of the 1970-80 change of export volume. The denominator is, of volume, with relative export price (Q8 - Q7) P7 course, the actual increase of dol- fixed at the initial (1970) level. The D7 lar export value, which reflects price component is the difference for the volume component, or the price and volume increases. To be between the total increase and the effect of the volume increase, and more precise, let C represent con- volume component. Concep- stant dollar indices of export volume, and V represent current dollar export values. The number tually, it measures the change in the purchasing power of the 1980 (Q8) (i5) I P8 P7' export volume which results from as the effect of the relative export following the letter designates the the 1970-80 change of relative price change. year-7 for 1970 and 8 for 1980. export price. Higher prices as a percentage of the increase of value is then measured Operationally, export purchas- External data sources by the formula: ing power is V8/D8 for 1980, and In Table 3.5, the Total value of V71D7 for 1970, where V is current imports is from OECD, Series B, V8 - (C8/C7) (V7) V8V7 dollar export value (as above) and Trade by Commodities. Import value D is the price deflator for the under GSP is from United Nations The intuitive meaning of this industrial countries' exports of all Conference on Trade and Devel- formula can be seen if concep- merchandise plus nonfactor ser- opment, Comprehensive Review of tually (a) Values are separated into vices. The total change of export the Generalized System of Preferences Price times Quantity and (b) the purchasing power (for example, (TDIB/C.5/63, dated 4/9/79). Quantities are substituted for the the third row in Table T2) is, of The data in Table 3.6 were Volumes. This gives: course, V8/D8 minus V71D7. The calculated from quantum indices 120 and current dollar value series distinguished in the following Movements in world prices are from United Nations, Monthly way: measured by changes in the unit Bulletin of Statistics, July 1980. External shocks equals Interna- value index of manufactured Indices for one-digit categories tional price effects plus Export exports f.o.b. from developed were combined using 1970 trade countries, a procedure consistent volume effects. values as weights. with the deflation of world trade Modes of adjustment equals elsewhere in this Report. Kenya's Structural adjustment (i.e., export-price increases exceeded Chapter 6 Export market penetration plus world-price increases for every The analysis presented in Chapter Import substitution) plus year between 1974 and 1978. They 6 examines the adjustment ex- Additional real external financ- reached a peak in 1977 and perience of oil-importing develop- ing plus Slower growth. declined in 1978, reflecting move- ing countries during 1974-78. It The details are explained using ments in coffee and tea prices. decomposes changes in the trade calculations shown in Table T3 for (2) Import price effects: the extent account into price and quantity Kenya, one of the poorest middle- to which the country's outlays on changes, comparing prices with income primary producing coun- imports were augmented by a rise their level5 in 1971-73 and quan- tries, with a per capita GNP of in import prices more rapid than tities with what would have hap- $380 in 1979. in world prices, both measured pened had various trends of from a 1971-73 base. Kenya's 1963-73 continued. This decom- External shocks import-price increases exceeded position, though only one of International price effects are the world-price increases for every several which might be chosen, sum of export and import price year between 1974 and 1978 and can be used to compare country effects. averaged $170 million or 5.7 per- experience within a common (1) Export price effects: the extent cent of GNP over this period. In framework and to make general to which the purchasing power of sum, Kenya suffered from adverse concepts more precise. exports was eroded by a rise in international price effects during In Table 6.2, the balance-of-pay- world prices more rapid than in the 1974-78 period, equal to an ments effects of external shocks the country's export prices, both average 1.1 percent of GNP. and modes of adjustment are measured from a 1971-73 base. Export volume effects: the dif- ference between trend and hypo- Table Ti Nonfuel primary exports: thetical exports. changes of export purchasing power and export volume, Trend exports are derived on by product category and by country, 1970-80 the assumptions (a) that world (change as a percentage of 1970 level) exports of Kenya's traditional pri- All Metals nonfuel Food and Nonfood and mary export products and devel- Country group and variable primary beverages agriculture minerals oping countries' exports of non- Developing countries traditional products grew from Low-income oil importers 1971-73 at the same rate as in the Change of relative years 1963-73 and (b) that the export price 36 28 33 61 country maintained its 1971-73 Change of export volume +84 +77 +92 +111 Composition of 1970 shares in those exports. The exports (percentage) 100 61 15 24 underlying assumption is that a Middle-income oil developing country's traditional importers primary exports compete against Change of relative all suppliers in the world market export price 27 17 19 52 whereas its nontraditional exports Change of export volume +81 +88 +35 +101 compete only against those of Composition of 1970 exports (percentage) 100 57 17 26 other developing countries. Industrial market economies Hypothetical exports are Change of relative derived on the assumption that export price 14 8 6 33 the country maintained its 1971-73 Change of export volume +80 +92 +80 +50 shares in world exports of its tradi- Composition of 1970 tional primary exports and in exports (percentage) 100 55 23 22 developing countries' exports of i21 Table T2 Purchasing power of exports of manufactured goods, nontraditional products, with increase by major country group, 1970-80 both the latter categories growing Developing countries at their actual rates starting from Oil importers 1971-73. The difference between Industrial Low- Middle- Oil market (1) and (2) arises from a fall in the Item income income exporters economies growth of international trade from Percentage change of 1971-73 onwards relative to its relative export prices -33 -22 -8 -7 growth during 1963-73. Over the Total increase of export purchasing power period as a whole, it averaged $508 (bIllions of 1978 dollars) 1.1 53.9 2.1 297.8 million less $453 million, or $55 Effect of volume change 3.9 77.4 2.6 346.4 million, equivalent to 1.8 percent Effect of relative price of GNP. change -2.7 -23.5 -0.5 -48.6 External shocks are the sum of Increase of export purchasing international price effects and power as percentage of 1970 level Total (net) increase export volume effects. They av- 26 194 61 76 Effect of volume change eraged 2.9 percent of Kenya's GNP 90 279 75 88 Effect of relative price over the 1974-78 period. change -64 -85 -14 -12 Table T3 Balance-of-payments effects of external shocks and modes of adjustment: Kenya (millions of dollars, 1971-73 prices) Av. Av. 1974-78 Item 1974 1975 1976 1977 1978 1974-78 (as percentage of GNP) I. External shocks 1. International price effects a. Export price effects -88 -35 -132 -313 -116 -137 (-4.6) b. Import price effects 206 65 85 215 278 170 (5.7) Sum (la + lb) 118 30 -47 -98 162 33 (1.1) 2. Export volume effects a. Trend exports 436 468 504 544 588 508 b. Hypothetical exports 423 418 471 464 492 453 Difference (2a - 2b) 13 50 33 80 96 55 (1.8) 3. Total (= 1 + 2) 131 80 -14 -18 258 88 (2.9) II. Modes of adjustment 1. Structural adjustment a. Export market penetration (i) Actual exports 375 370 391 373 364 375 (ii) Hypothetical exports 423 418 471 464 492 453 Difference [(i) - (ii)1 -48 -48 -80 -91 -128 -78 (-2.6) b. Import substitution (i) Hypothetical imports 635 681 717 790 858 736 (ii) Actual imports 571 573 550 642 580 583 Difference [(i) - (ii)] 64 108 167 148 278 153 (5.1) Sum (= la + ib) 16 60 87 57 150 75 (2.5) 2. Additional real external financing a. Real resource gap 314 233 112 171 378 241 b. Trend resource gap 220 236 251 266 280 250 Difference (2a - 2b) 94 -3 -139 -95 98 -9 (-.3) 3. Slower growth a. Trend imports 656 704 755 810 868 758 b. Hypothetical imports 635 681 717 790 858 736 Difference (3a - 3b) 21 23 38 20 10 22 (.7) 4. TOtal (= 1 + 2 + 3) 131 80 -14 -18 258 88 (2.9) 122 Modes of adjustment level. It will be recalled that which gave firms effective veto Slower growth: the difference hypothetical exports show the power over imports. between trend and hypothetical consequences of maintaining Structural adjustment (i.e., ex- imports. 1971-73 market shares. The dif- port market penetration plus im- Trend imports are derived on ference between actual exports port substitution) on average the assumptions (a) that income ($375 million in 1974-78) and accounted for 85 percent of the elasticities of import demand, esti- hypothetical exports ($453 million balance-of-payments accommo- mated separately for fuel and non- in 1974-78) is then attributed to dation to external shocks during fuel imports, remained at their market penetration. This was 1974-78. 1963-73 levels and (b) that the -$78 million or -2.6 percent of Additional real external financ- growth of GNP starting from GNP, the adverse impact of which ing: the difference between real 1971-73 remained the same as in almost equaled external shocks and trend resource gaps. the years 1963-73. (2.9 percent of GNP). The losses The real resource gap, i.e., Hypothetical imports are were concentrated in nontradi- the difference between the nomi- derived on the assumption that tional primary and manufactured nal values of actual imports and the income elasticities of import exportsreflecting an increasing actual exports, corrected for the demand for fuel and nonfuel bias against exports in trade policy general rise in world prices; and imports remained unchanged at as well as the breakup of the East the trend resource gap, i.e., their 1963-73 levels, with GNP African Community. that obtained by subtracting trend growing at its actual rate starting (2) Import substitution: savings in exports from trend imports, from 1971-73. imports associated with a fall in measured at 1971-73 prices. The difference between (1) and the income elasticities of import Both resource gaps refer to (2) arises from a fall in the growth demand from the 1963-73 period. merchandise trade alone and of GNP from 1971-73 onwards It will be recalled that hypothetical exclude nonfactor services. The relative to its growth during imports show the consequences of difference between the real 1963-73. This averaged 0.7 percent unchanged income elasticities. resource gap ($241 million in of GNP, or nearly a quarter of the The difference between hypo- 1974-78) and the trend resource total adjustment, with a peak in thetical imports ($736 million in gap ($250 million in 1974-78) is 1976, reflecting the application of 1974-78) and actual imports ($583 additional real external financing, restrictive fiscal and monetary million in 1974-78) is taken to i.e., extra financing corrected for policy and import restrictions. reflect import substitution. At the general rise in world prices. It Structural adjustment is the $153 million or 5.1 percent of GNP, averaged minus $9 million. Addi- sum of export market penetration import substitution was by far the tional nominal financing did not and import substitution. dominant mode of adjustment in therefore rise as rapidly as world (1) Export market penetration: Kenya. This could be attributed to inflation and Kenya essentially increases in exports associated greater reliance on import restric- relied on domestic modes of with an increase in Kenya's share tions and the increase in the use of adjustment to respond to external of export markets from its 1971-73 Letter of No Objection privileges shocks during the 1974-78 period. 123 Bibliographical note This Report has drawn on a wide The sensitivity analysis is the Waelbroeck. Murray is a useful range of World Bank work as well result of simulations undertaken source on the Generalized System as on external research. Selected with the Brussels Global Develop- of Preferences, Yeats on tariff sources used in each chapter are ment Model, which is calibrated to escalation, Bale and Lutz on briefly noted below, and then the Bank's Global Framework. The agricultural protection and Finger listed alphabetically. The World Brussels model is also the source (1975) on the offshore assembly Bank sources include sector policy of the projected trade shares di- provisions. Issues related to com- papers, ongoing economic analy- vided between North and South. modity processing will be re- sis and research, and project, sec- This model is described in Wael- viewed in a forthcoming World tor and economic work on individ- broeck and associates. The num- BankCommonwealth Secretariat ual countries. In addition, a set of bers living in poverty are based on volume on the processing of prim- background papers is commis- the methodology developed by ary commodities in developing sioned for each Report; their pri- Ahluwalia, Carter and Chenery, countries. The potential value to mary purpose is to synthesize the applied to the current projections developing countries of the new relevant literature and Bank work. of income and population. For the GATT codes are analyzed in the (Thus the sources cited in these methodology and results of the 1980 World Development Report and papers are not listed separately.) International Comparison project, in references cited there. Useful Many of the background papers see Kravis, Heston and Summers. sources on international trade are issued as World Bank Staff dispute settlement mechanisms Working Papers, which are avail- Chapter 3 are Hufbauer and Shelton on able at no charge from the Bank's Frank surveys a number of trade export incentives and counter- Publications Unit. The views they issues of particular interest to measures and Merciai on safe- express are not, however, nec- developing countries. Hughes guards. The table in the box on essarily those of the World Bank or and Waelbroeck synthesize a tariff escalation is from Yeats; in of this Report. number of studies of the penetra- that on mineral investment, from lion of industrial-country markets Mikesell. by developing-country exports, Selected sources, by chapter and Havrylyshyn and Wolf ana- Chapter 4 lyze the evolution of South-South The broad energy outlookde- Chapter 2 trade. Trade policy in developing mand trends and supply pros- The basic projections shown in the countries is discussed in the 1979 pects - for both the industrial chapter are the products of the World Development Report, in and developing countries is re- World Bank's Global Framework. references cited there, and in viewed in Choe, Lambertini and The data for this exercise are simi- Balassa (1980b). Wolf, Finger (1981) Pollak. Trends in domestic lar to those in the World Bank Atlas, and Nelson analyze industrial- user-prices and energy-tax levels 1980 and the World Tables, second country policy. For analyses of the are discussed in International edition. For a discussion of the mechanisms through which Energy Agency. The way in which underlying assumptions for the industrial countries administer energy prices affect consumption projections, see Cheetham, Gupta their trade policy, see Finger, Hall and, in turn, the relationship be- and Schwartz, and World Bank and Nelson; Verreydt and tween income growth and energy (forthcoming). Waelbroeck; and Hughes and demand has been thoroughly 124 investigated for the developing Reporting System and its Bor- which also explores the role of sav- countries in Choe. Elasticities for rowing in International Capital ings and investment in the adjust- the industrial countries are sur- Markets as well as on the Interna- ment process. Table 6.3 is taken veyed in Energy Modelling Forum. tional Monetary Fund's Inter- from the work of Bhalla. Descrip- World Bank (1980) discusses national Financial Statistics, annual tions of country adjustment have prospects for developing various and quarterly reports by the Bank drawn extensively on World Bank energy sources in developing for International Settlements, and country economic work and on countries in the coming decade. Development Cooperation, the Jaspersen, Liebenthal and Wallich Hughart reviews developing- annual review of the OECD for oil-importing developing country nonconventional re- Development Assistance Com- countries; on Gelb for capital- sources. HablUtzel discusses the mittee. deficit oil-exporting countries and production strategies and special Both Bryant and Joshi analyze on Hablützel for capital-surplus concerns of the capital-surplus oil- the macroeconomics of interna- oil-exporting countries. The exporting countries. tional adjustment. Bryant empha- material on nonmarket industrial The "other energy crisis," the sizes the interdependencies of economies is based on Schrenk. crisis in fuelwood, and its human trade and capital flows and Joshi and ecological consequences is the highlights potential market Chapter 7 subject of Spears. Projects to help failures and areas for interven- The main source for material on provide energy for the poor are tion. Fleming discusses the poverty, growth and human reviewed in Noronha. general issues of private capital development is the 1980 World The impacts of higher energy flows to developing countries, Development Report and the prices on growth are investigated O'Brien describes the evolution of background material cited in Manne. Berndt and Wood's relationships between private therein, especially Hicks, and Haq survey reviews empirical esti- banks and developing countries and Burki. The impact of the mates from a range of studies of and Hope analyzes the debt situa- budgetary process on human the ease with which other factors tion and its implications for future development programs is can be substituted for energy use borrowing. Swamy reviews past discussed in Knight, especially in production. Ridker provides trends and future prospects for the chapter by Meerman. The background on the sectoral labor migration and remittances. analysis of food production impacts of higher energy prices. problems is based on a review of The basis for estimating capital Chapter 6 World Bank agricultural sector requirements for the developing The shock-adjustment calcula- studies for several countries. Food countries' programs of energy tions are based on a framework of distribution, especially its rela- development are discussed in analysis pioneered by Balassa tionship to external economic World Bank (1980). Figure 4.7 is (1980a, 1981 and forthcoming). pressures and potential conflicts derived from Bechtel. Portions of his work have also ap- with production concerns, is peared in Balassa and Barsony, a discussed in Clay (1981a and b), Chapter 5 report issued by the OECD Chambers and Singer, and Lipton. Data on external finance are com- Development Centre. The esti- Recent evidence on the determi- piled by various international mates in Table 6.2 have been nants of fertility decline and its institutions. Those processed by adapted from those papers. The relationship to human develop- the World Bank draw on its Debtor approach is extended in Mitra, ment programs is in Birdsall. Selected sources Ahiuwalia, Montek, Nicholas Carter and Hollis B. Chenery. "Growth and Poverty in Developing Countries." Journal of Development Economics 6:3 (September 1979), 299-341. Balassa, Bela. "Adjustment to External Shocks in Developing Economies." World Bank Staff Working Paper, 1981* (forthcoming). "The Newly Industrializing Developing Countries After the Oil Crisis." World Bank Staff Working Paper, no. 437, October 1980a. "The Process of Industrial Development and Alternative Development Strategies." World Bank Staff Working Paper, no. 438, October 1980b. "Policy Experience in Twelve Less Developed Countries." World Bank Staff Working Paper, no. 449, April 1981.* 125 Balassa, Bela and André Barsony. "Policy Responses to External Shocks in Developing Countries." Paris: OECD, 1981. Bale, Malcolm D. and Ernst Lutz. "Price Distortions in Agriculture and Their Effects: An International Comparison." American Journal of Agricultural Economics 63:1 (February 1981), 8-22. Bechtel. "Economic Review of Advanced Fuel and Power Technologies." Mimeographed. San Francisco, California: Bechtel, August 1980. Berndt, E., and D. Wood. "Engineering and Econometric Interpretations of EnergyCapital Complementarity." American Economic Review 69:3 (September 1979). Bhalla, Surjit S. "The Transmission of Inflation into Developing Economies." In Cline and Associates. Birdsall, Nancy. Population Growth and Poverty in the Developing World. Washington: Population Reference Bureau, Inc. December 1980. Bryant, Ralph. "Notes on the Analysis of Capital Flows to Developing Nations and the 'Recycling' Problem." World Bank Staff Working Paper, 1981* (forthcoming). Chambers, Robert, and Hans Singer. "Poverty, Malnutrition and Food in Zambia." World Bank Staff Working Paper, 1981* (forthcoming). Cheetham, R.J., S. Gupta and A. Schwartz. "The Global Framework." World Bank Staff Working Paper, no. 355, September 1979. Choe, Boum Jong. "Energy Demand in Developing Countries." In International Energy Strategies, edited by Joy Dunkerley. Proceedings of the 1979 International Association of Energy Economists and Resources for the Future Conference. Washington, 1980. Choe, Bourn long, Adrian Lambertini and Peter Pollak. "Global Energy Prospects." World Bank Staff Working Paper, 1981* (forthcoming). Clay, Edward. "Food Policy Issues in Low-Income Countries." World Bank Staff Working Paper, 1981a* (forthcoming). "Poverty, Food Insecurity and Public Policy in Bangladesh." World Bank Staff Working Paper, 1981b* (forthcoming). Cline, William R., and Associates. World Inflation and the Developing Countries. Washington: The Brookings Institution, 1981. Energy Modelling Forum. "Aggregate Elasticity of Energy Demand," vol. 1. Stanford, California: Stanford University, August 1980. Finger, J.M. "Tariff Provisions for Offshore Assembly and the Exports of Developing Countries" Economic Journal 85 (June 1975), 365-71. "Industrial Country Policy and Adjustment to Imports From Developing Countries." World Bank Staff Working Paper, 1981* (forthcoming). Finger, J.M., H. Keith Hall and Douglas R. Nelson. "The Political Economy of Administered Protection." American Economic Review (forthcoming). Fleming, Alex. "Private Capital Flows to Developing Countries and their Determination: Historical Perspective, Current Experience and Future Prospects." World Bank Staff Working Paper, 1981* (forthcoming). Frank, Isaiah. "LDC Trade Policy Issues for the 1980s. World Bank Staff Working Paper, 1981* (forthcoming). Gelb, Alan. "Capital-Importing Oil Exporters: Adjustment Issues and Policy Choices." World Bank Staff Working Paper, 1981* (forthcoming). Hablutzel, Rudolf. "Development Prospects of Capital-Surplus Oil-Exporting Countries: Iraq, Kuwait, Libya, Qatar, Saudi Arabia, UAE1 World Bank Staff Working Paper, 1981* (forthcoming). Haq, Mahbub ul and Shahid Javed Burki. Meeting Basic Needs: An Overview. Poverty and Basic Needs Series. Washington: World Bank, September 1980. Havrylyshyn, Oh and Martin Wolf. "Trade Among Developing Countries: Theory, Policy Issues and Principal Trends." World Bank Staff Working Paper, 1981* (forthcoming). Hicks, Norman. "Economic Growth and Human Resources." World Bank Staff Working Paper, no. 408, July 1980. Hope, Nicholas C. "Developments in and Prospects for the External Debt of Developing Countries: 1970-80 and Beyond." World Bank Staff Working Paper, 1981* (forthcoming). Hufbauer, Gary C. and J.R. Shelton. The International Discipline of Export Incentives and Countermeasures. London: Trade Policy Research Centre (forthcoming). Hughart, D. "Prospects for Traditional and Nonconventional Energy Sources in Developing Countries." World Bank Staff Working Paper, no. 346, July 1979. Hughes, Helen and Jean Waelbroeck. "Trade and Protection in the 1970s: Can the Growth of Developing Countries Continue in the 1980s?" World Bank Staff Working Paper, 1981* (forthcoming). 126 Independent Commission on International Development Issues [The "Brandt Commission"j. North-South: A Program for Survival. Cambridge, Massachusetts: The MIT Press, 1980. International Energy Agency. Energy Policies and Programmes of lEA Countries-1979 Review. Paris: OECD, 1979. Jaspersen, Frederick Z. "Adjustment Experience and Growth Prospects of the Newly Industrializing Countries." World Bank Staff Working Paper, 1981* (forthcoming). Joshi, Vijay. "International Adjustment in the 1980s." World Bank Staff Working Paper, 1981* (forthcoming). King, Timothy, ed. Education and Income. World Bank Staff Working Paper, no. 402, July 1980. Knight, Peter T., ed. Implementing Programs of Human Development. World Bank Staff Working Paper, no. 403, July 1980. Kravis, Irving B., A. Heston and R. Summers. International Comparisons of Real Product and Purchasing Power. Baltimore and London: Johns Hopkins University Press, 1978. Liebenthal, Robert. "Adjustment in Low-Income Africa." World Bank Staff Working Paper, 1981* (forthcoming). Lipton, Michael. "Risks to Nutritional Adequacy of Food Output: Adjustments in India." World Bank Staff Working Paper, 1981* (forthcoming). Manne, Alan. "Energy, Trade and Economic Growth." World Bank Staff Working Paper, 1981* (forthcoming). Meerman, Jacob. "Paying for Human Development." In Knight, ed. Merciai, Patrizio. "Safeguard Measures in the GATT" Journal of World Trade Law 15:1 (January-February 1981), 41-66. Mikesell, Raymond F. New Patterns of World Mineral Development. British-North America Committee, Washington, 1979. Mitra, Pradeep, K. "An Analysis of Adjustment in Developing Countries." World Bank Staff Working Paper, 1981* (forthcoming). Murray, Tracey. Trade Preferences for Developing Countries. London: Macmillan, 1977. Nelson, Douglas R. "The Political Structure of the New Protectionism" World Bank Staff Working Paper, 1981* (forthcoming). Noronha, R. "Village Woodlots: Are They a Solution?" Paper prepared for a panel on Introduction and Diffusion of Renewable Energy Technologies, National Academy of Science, Washington, November 1980. O'Brien, Richard. "Private Bank Lending to Developing Countries." World Bank Staff Working Paper, 1981* (forthcoming). OECD, Interfutures. Facing the Future: Mastering the Probable and Managing the Unpredictable. Paris: OECD, 1979. Ridker, Ronald. "The Management of Energy Use in Developing Countries." Mimeographed. Washington: World Bank, 1981.* Sapir, André and Ernst Lutz. "Trade in Services: Economic Determinants and Development Related Issues:' World Bank Staff Working Paper, 1981* (forthcoming). Schrenk, Martin. "The Present and Prospective Role of the CMEA Countries in the World Economy:' World Bank Staff Working Paper, 1981* (forthcoming). Spears, J. "Wood as an Energy Source: The Situation in the Developing World." Speech to the 103rd Annual meeting of the American Forestry Association, October 1978. Swamy, Gurushn. "International Labor Migration and Workers RemittancesIssues and Prospects:' World Bank Staff Working Paper, 1981* (forthcoming). United Nations. World Energy Supplies 1973 1978. Statistical Papers, Series J, no. 22. New York: United Nations, 1979. Verreydt, E. and Jean Waelbroeck. "European Community Protection Against Manufactured Imports from Developing Countries: A Case Study in the Political Economy of Protection:' World Bank Staff Working Paper, no. 432, October 1980. Waelbroeck Jean, J.M. Burniaux, G. Carrin and J. Gunning. "General Equilibrium Modeling of Global Adjustment:' World Bank Staff Working Paper, 1981* (forthcoming). Wallich, Christine. "A Comparative Analysis of Developing-Country Adjustment Experiences: Adjustment in Low- Income South Asia:' World Bank Staff Working Paper, 1981* (forthcoming). Wolf, Martin. "Adjustment Policies and Problems in Developed Countries." World Bank Staff Working Paper, no. 349, August 1979. World Bank, Economic Analysis and Projections Department. "Development in a Changing Environment." World Bank Staff Working Paper, 1981* (forthcoming). World Bank. "Energy in the Developing Countries." Washington, August 1980. Yeats, Alexander J. Trade Barriers Facing Developing Countries. New York: St. Martin, 1979. An asterisk (") after a citation indicates papers prepared as part of the background work for this Report. 127 Annex World Development Indicators Contents Key 132 Introduction 133 Table 1. Basic Indicators 134 Population D Area D GNP per capita G Inflation D Adult literacy 0 Life expectancy 0 Food production per capita Table 2. Growth of Production 136 GDP U Agriculture U Industry 0 Manufacturing U Services Table 3. Structure of Production 138 GDP U Agriculture 0 Industry 0 Manufacturing 0 Services Table 4. Growth of Consumption and Investment 140 Public consumption 1 Private consumption 0 Gross domestic investment Table 5. Structure of Demand 142 Public consumption U Private consumption D Gross domestic investment U Gross domestic saving U Exports of goods and nonfactor services 0 Resource balance Table 6. Industrialization 144 Share of value added in food and agriculture 0 in textiles and clothing U in machinery and transport equipment U in chemicals D in other manufacturing U Value added in manufacturing U Gross manufacturing output per capita Table 7. Commercial Energy 146 Growth of energy production 0 Growth of energy consumption O Energy consumption per capita 0 Energy imports as percentage of merchandise exports Table 8. Merchandise Trade 148 Export values 0 Import values U Growth of exports 0 Growth of imports o Terms of trade Table 9. Structure of Merchandise Exports 150 Fuels, minerals and metals Other primary commodities U U Textiles and clothing U Machinery and transport equipment 0 Other manufactures Table 10. Structure of Merchandise Imports 152 Food U Fuels U Other primary commodities U Machinery and transport equipment U Other manufactures Table 11. Destination of Merchandise Exports 154 Industrial market economies 0 Developing countries U Nonmarket industrial economies U Capital-surplus oil exporters Table 12. Trade in Manufactured Goods 156 To industrial market economies U To developing countries LI To nonmarket industrial economies 0 To capital-surplus oil exporters U Value of manufactured exports Table 13. Balance of Payments and Debt Service Ratios 158 Current account balance before interest payments on external public debt U Interest payments on external public debt U Debt service as percentage of GNP U as percentage of exports of goods and services 130 Table 14. Flow of External Capital 160 Gross inflow of public and publicly guaranteed medium- and long-term loans O Repayment of principal o Net inflow of public and publicly guaranteed medium- and long-term loans 0 Net direct private investment Table 15. External Public Debt and International Reserves 162 External public debt outstanding and disbursed 0 as percentage of GNP 0 Gross international reserves 0 in months of import coverage Table 16. Official Development Assistance from OECD and OPEC Members 164 Amount in dollars 0 as percentage of donor GNP 0 in national currencies 0 Net bilateral flow to low-income countries Table 17. Population Growth, Past and Projected, and Hypothetical Stationary Population 166 Past growth of population ii Projected population El Hypothetical size of stationary production El Assumed year of reaching net reproduction rate of 1 0 Year of reaching stationary population Table 18. Demographic and Fertility-related Indicators 168 Crude birth rate El Crude death rate 0 Total fertility rate 0 Percentage of women in reproductive age group 0 Percentage of married women using contraceptives Table 19. Labor Force 170 Population of working age El Labor force in agriculture fl in industry 0 in services U Growth of labor force, past and projected Table 20. Urbanization 172 Urban population as percentage of total population 0 Growth of urban population U Percentage in largest city U in cities of over 500,000 persons U Number of cities of over 500,000 persons Table 21. Indicators Related to Life Expectancy 174 Life expectancy U Infant mortality rate U Child death rate Table 22. Health-related Indicators 176 Population per physician U per nursing person U Percentage of population with access to safe water 0 Daily calorie supply per capita Table 23. Education 178 Number enrolled in primary school as percentage of age group U in secondary school 0 in higher education U Adult literacy Table 24. Defense and Social Expenditure 180 Defense expenditure as percentage of GNP U as percentage of central government expenditure U Per capita central government expenditure on defense 0 on education U on health Table 25. Income Distribution 182 Percentage share of household income, by percentile groups of households Technical Notes 184 Bibliography of Data Sources 192 131 Key Figures in the colored bands are summary Not available. In each table, countries are listed in their measures for groups of countries. The (.) Less than half the unit shown. group in ascending order of income per letter w after a summary measure capita. The reference numbers indicating indicates that it is a weighted average; the All growth rates are in real terms. that order are shown in the alphabetical letter m, that it is a median value; the Figures in italics are for years or periods list of countries below. letter t, that it is a total. other than those specified. Afghanistan 11 Hong Kong 92 Peru 57 Albania 60 Hungary 121 Philippines 51 Algeria 78 India 15 Poland 120 Angola 41 Indonesia 35 Portugal 87 Argentina 88 Iran 86 Romania 84 Australia 104 Iraq 115 Rwanda 17 Austria 102 Ireland 97 Saudi Arabia 116 Bangladesh 4 Israel 95 Senegal 40 Belgium 110 Italy 98 Sierra Leone 21 Benin 19 Ivory Coast 65 Singapore 93 Bhutan 3 Jamaica 72 Somalia 8 Bolivia 48 Japan 103 South Africa 81 Brazil 82 Jordan 70 Spain 96 Bulgaria 119 Kampuchea, Democratic 1 Sri Lanka 18 Burma 10 Kenya 37 Sudan 36 Burundi 13 Korea, Democratic Republic of 69 Sweden 113 Cameroon 49 Korea, Republic of 77 Switzerland 114 Canada 105 Kuwait 118 Syrian Arab Republic 64 Central African Republic 29 Lao People's Democratic Republic 2 Tanzania 25 Chad 5 Lebanon 71 Thailand 50 Chile 80 Lesotho 33 Togo 34 China 22 Liberia 45 Trinidad and Tobago 91 Colombia 62 Libya 117 Tunisia 68 Congo, People's Republic of 52 Madagascar 30 Turkey 73 Costa Rica 83 Malawi 16 Uganda 31 Cuba 76 Malaysia 74 Union of Soviet Socialist Czechoslovakia 123 Mali 9 Republics 122 Denmark 112 Mauritania 32 United Kingdom 100 Dominican Republic 61 Mexico 79 United States 108 Ecuador 66 Mongolia 59 Upper Volta 14 Egypt, Arab Republic of 43 Morocco 58 Uruguay 85 El Salvador 55 Mozambique 20 Venezuela 90 Ethiopia 6 Nepal 7 Viet Nam, Socialist Finland 101 Netherlands 107 Republic of 12 France 106 New Zealand 99 Yemen Arab Republic 39 German Democratic Republic 124 Nicaragua 53 Yemen, People's Democratic Germany, Federal Republic of 111 Niger 27 Republic of 44 Ghana 38 Nigeria 56 Yugoslavia 89 Greece 94 Norway 109 Zaire 26 Guatemala 63 Pakistan 24 Zambia 46 Guinea 28 Panama 75 Zimbabwe 42 Haiti 23 Papua New Guinea 54 Honduras 47 Paraguay 67 132 Introduction The World Development Indica- between figures shown this year for oil importers and for oil expor- tors provide information on the and last year reflect revisions to ters. The weights used in com- main features of social and eco- historical series by the reporting puting the summary measures nomic development. This edition countries. They also reflect revi- are described in the technical generally follows the format used sions to the estimates of popula- notes relating to an indicator. The in previous years But the coun- tion on the basis of new inferma- - letter w after a summary measure try classifications have been lion from surveys and censuses. indicates that it is a weighted revised to make them more use- The country groups used in the average; the letter m, that it is a ful for analysis, additional sum- tables are: 36 low-income median value; the letter t, that it is mary measures have been incor- developing countries with a per a total. The median is the middle porated, and there is a new table capita income of $370 or less in value of a set arranged in order of showing expenditure on defense 1979; 60 middle-income develop- magnitude. Because the coverage and the main social services. ing countries with a per capita of countries is not uniform for all The indicators in Table 1 give a income of more than $370; 18 indicators and because the varia- summary profile of countries. industrial market economies; 4 lion around central tendencies The data in other tables fall into capital-surplus oil exporters; and can be large, readers should exer- the following broad areas: 6 nonmarket industrial econo- cise caution in comparing the national accounts, industrializa- mies. A number of countries have summary measures for different tion, energy, external trade, aid been reclassified this year to indicators, country groups and flows, demography, labor force, improve the presentation. years or periods. urbanization, social indicators, Within each group, countries Readers should also exercise defense and social expenditure, are listed in ascending order of caution in comparing indicators and income distribution. Most of income per capita, and that order across countries. Although the the information used in comput- is used in all tables. The alpha- statistics presented are drawn ing these indicators was drawn betical list on the opposite page from sources generally consid- from the data files and publica- shows the reference number of ered the most authoritative and tions of the World Bank, the each country. Countries with reliable, some of them, par- International Monetary Fund and populations of less than a million ticularly those describing social the United Nations and spe- are not reported in the tables, features and income distribution, cialized agencies. largely for lack of comprehensive are subject to considerable mar- For ease of reference, ratios and data. The technical notes for Table gins of error. In addition, varia- rates of growth are shown; abso- 1 show some basic indicators for tions in national practices mean lute values are reported only in a 31 small countries that are mem- that the data in certain instances few instances. Most growth rates bers of the United Nations, the are not strictly comparable. The were calculated for two periods: World Bank or both. data should thus be construed 1960-70 and 1970-79, or 1970-78 Summary measuresweighted only as indicating trends and if data for 1979 were not available. averages, median values or characterizing major differences All growth rates are in real terms totalswere calculated for the between countries. and were computed, unless country groups only if data were The technical notes should be noted otherwise, by using the adequate and meaningful statis- referred to in any use of the data. least-squares method. Because tics could be obtained. Because These notes outline the concepts, this method takes all observations China and India heavily bias the definitions, methods and data in a period into account, the summary measures for all low- sources. The bibliography gives resulting growth rates reflect gen- income countries, summary mea- details of the data sources, which eral trends that are not unduly sures are also shown for China contain comprehensive defini- influenced by exceptional values. and India and for other low- lions and descriptions of con- Table entries in italics indicate income countries. And because cepts used. that they are for years or periods trade in oil affects the economic The World Development other than those specified. All characteristics and performance Indicators are prepared under the dollar figures are US dollars. of middle-income countries, sum- direction of Ramesh Chander. Some of the differences mary measures are also hown 133 Table 1. Basic Indicators GNP per capita Average Average index Area annual Average annual Adult Life ex- of food Popula- (thousands growth rate of inflation literacy pectancy production tion of square (per- (percent) rate at birth per capita (millions) kilo- Dollars cent) (percent) (years) (1969-71 = 100) Mid-1979 meters) 1979 1960-79 1960_70a 1970-79 1976b 1979 1977-79 Low-income countries 2,260.2 t 33,778 t 230w 1.6w 3.0 m 10.8 in 51 w 57 w 105 w China and India 1,623.7 12,885 t 230w .. .. 54w 59w 108 w Other low-income 636.5 20,893 t 240 w 1.8 w 3.0 in 10.9 m 43 w 50w 97 w 1 Kampuchea, Dem, . . 181 . . 3.8 . 2 Lao PDR 3.3 237 . . . . 42 87 3 Bhutan 1.3 47 80 -0.1 . . . . . . 44 100 4 Bangladesh 88.9 144 90 -0.1 3.7 15.8 26 49 92 5 Chad 4.4 1,284 110 -1.4 4.6 7.9 15 41 91 6 Ethiopia 30.9 1,222 130 1.3 2.1 4.3 15 40 84 7 Nepal 14.0 141 130 0.2 7.7 8.7 19 44 88 8 Somalia 3.8 638 . . -0.5 4.5 11.3 60 44 85 9 Mali 6.8 1,240 140 1.1 5.0 9.7 10 43 88 10 Burma 32.9 677 160 1.1 2.7 12.1 67 54 97 11 Afghanistan 15.5 648 170 0.5 11.9 4.4 12 41 94 12 Viet Nam 52.9 330 . . . . . . . . 87 63 106 13 Burundi 4.0 28 180 2.1 2.8 11.2 25 42 105 14 Upper Volta 5.6 274 180 0.3 1.3 9.8 . . 43 93 15 India 659.2 3,288 190 1.4 7.1 7.8 36 52 99 16 Malawi 5.8 118 200 2.9 2.4 9.1 25 47 100 17 Rwanda 4.9 26 200 1.5 13.1 14.6 . . 47 107 18 Sri Lanka 14.5 66 230 2.2 1.8 12.3 85 66 124 19 Benin 3.4 113 250 0.6 1.9 9.2 47 97 20 Mozambique 10.2 783 250 0.1 2.8 11.0 47 75 21 Sierra Leone 3.4 72 250 0.4 2.9 11.3 . . 47 87 22 China 964.5 9,597 260 . . . . . . 66 64 114 23 Haiti 4.9 28 260 0.3 4.1 10.9 . . 53 90 24 Pakistan 79.7 804 260 2.9 3.3 13.9 24 52 101 25 Tanzania 18.0 945 260 2.3 1.8 13.0 66 52 94 26 Zaire 27.5 2,345 260 0.7 29.9 31.4 15 47 90 27 Niger 5.2 1,267 270 -1.3 2.1 10.8 8 43 89 28 Guinea 5.3 246 280 0.3 1.5 4.4 20 44 86 29 Central African Rep. 2.0 623 290 0.7 4.1 9.1 . . 44 102 30 Madagascar 8.5 587 290 -0.4 3.2 10.1 50 47 94 31 Uganda 12.8 236 290 -0.2 3.0 28.3 . . 54 90 32 Mauritania 1.6 1,031 320 1.9 1.6 10.1 17 43 75 33 Lesotho 1.3 30 340 6.0 2.5 11.6 52 51 100 34 logo 2.4 57 350 3.6 1.1 10.3 18 47 81 35 Indonesia 142.9 1,919 370 4.1 . . 20.1 62 53 103 36 Sudan 17.9 2,506 370 0.6 3.7 6.8 20 47 105 Middleincome countries 985.0 38,705 1,420w 3.8 iv 3.0 in 13.3 in 72w 61 w 107 iv Oil exporters 324.8 13,781 1,120 w 3.1 w 3.0 in 14.0 in 64w 57 in 97 iv Oil importers 660.2 24,924 1,550 w 4.1 w 3.0 in 12.2 in 76 w 63 u' 113 in 37 Kenya 15.3 583 380 2.7 1.5 11.1 45 55 92 38 Ghana 11.3 239 400 -0.8 7.6 32.4 . . 49 82 39 Yemen Arab Rep. 5.7 195 420 10.9 . . 17.8 13 42 95 40 Senegal 5.5 197 430 -0.2 1.7 7.6 10 43 88 41 Angola 6.9 1,247 440 -2.1 3.3 21.6 42 85 42 Zimbabwe 7.1 391 470 0.8 1.3 8.4 . . 55 100 43 Egypt 38.9 1,001 480 3.4 2.7 8.0 44 57 93 44 Yemen, PDR 1.9 333 480 11.8 . . . . 27 45 106 45 Liberia 1.8 111 500 1.6 1.9 9.4 30 54 101 46 Zambia 5.6 753 500 0.8 7.6 6.8 39 49 99 47 Honduras 3.6 112 530 1.1 2.9 8.4 60 58 82 48 Bolivia 5.4 1,099 550 2.2 3.5 32.4 63 50 108 49 Cameroon 8.2 475 560 2.5 4.2 10.3 . . 47 110 50 Thailand 45.5 514 590 4.6 1.8 9.5 84 62 126 51 Philippines 46.7 300 600 2.6 5.8 13.3 88 62 115 52 Congo, People's Rep. 1.5 342 630 0.9 5.4 10.9 . . 47 81 53 Nicaragua 2.6 130 660 1.6 1.9 12.2 90 56 104 54 Papua New Guinea 2.9 462 660 2.8 3.6 9.5 . . 51 106 55 El Salvador 4.4 21 670 2.0 0.5 10.8 62 63 113 56 Nigeria 82.6 924 670 3.7 2.6 19.0 . . 49 87 57 Peru 17.1 1,285 730 1.7 10.4 26.8 80 58 88 58 Morocco 19.5 447 740 2.6 2.0 7.3 28 56 83 59 Mongolia 1.6 1,565 780 3.0 63 97 60 Albania 2.7 29 840 4.2 . . . . . . 70 105 61 Dominican Rep. 5.3 49 990 3.4 2.1 8.4 67 61 94 62 Colombia 26.1 1,139 1,010 3.0 11.9 21.5 63 119 63 Guatemala 6.8 109 1,020 2.9 0.1 10.6 . . 59 107 64 Syrian Arab Rep. 8.6 185 1,030 4.0 1.9 12.7 58 65 145 134 GNP per capita Average Average index Area annual Average annual Adult Life ex- of food Popula- (thousands growth rate of inflation literacy pectancy production tion of square (per- (percent) rate at birth per capita (millions) kilo- Dollars cent) (percent) (years) (1969-71 = 100) Mid-1979 meters) 1979 1960-79 1960_70a 1970-79 1976b 1979 1977-79 65 Ivory Coast 8.2 322 1,040 2.4 2,8 13.5 20 47 102 66 Ecuador 8.1 284 1050 4.3 . . 14.7 77 61 102 67 Paraguay 3.0 407 1,070 2.8 3.1 9.3 84 64 109 68 Tunisia 6.2 164 1,120 4.8 3.7 7.5 62 58 118 69 Korea, Dem. Rep, 17.5 121 1,130 3.5 . . 63 133 70 Jordan 3.1 98 1,180 5.6 . . 70 61 89 71 Lebanon 2.7 10 . . . . 1.4 . . 66 86 72 Jamaica 2.2 11 1,260 1.7 3.9 17.4 . . 71 98 73 Turkey 44.2 781 1,330 3.8 5.6 24.6 60 62 110 74 Malaysia 13.1 330 1,370 4.0 -0.3 7.3 60 68 112 75 Panama 1.8 77 1,400 3.1 1.6 7.4 . . 70 102 76 Cuba 9.8 115 1,410 4.4 . . . . 96 72 100 77 Korea, Rep. of 37.8 98 1,480 7.1 17.5 19.5 93 63 138 78 Algeria 18.2 2,382 1,590 2.4 2.3 13.3 35 56 75 79 Mexico 65.5 1,973 1,640 2.7 3.6 18.3 82 66 104 80 Chile 10.9 757 1,690 1.2 32.9 242.6 67 95 81 South Africa 28.5 1,221 1,720 2.3 3.0 11.8 . . 61 102 82 Brazil 116.5 8,512 1,780 4.8 46.1 32.4 76 63 115 83 Costa Rica 2.2 51 1820 3.4 1.9 15.4 90 70 110 84 Romania 22.1 238 1,900 9.2 -0.2 0.8 98 71 146 85 Uruguay 2.9 176 2,100 0.9 51.1 64.0 94 71 96 86 Iran 37.0 1,648 . . . . -0.5 . . 50 54 109 87 Portugal 9.8 92 2,180 5.5 3.0 16.1 70 71 77 88 Argentina 27.3 2,767 2,230 2.4 21.7 128.2 94 70 119 89 Yugoslavia 22.1 256 2,430 5.4 12.6 17.8 85 70 116 90 Venezuela 14.5 912 3,120 2.7 1.3 10.4 82 67 100 91 Trinidad and Tobago 1.2 5 3,390 2.4 3.2 19.5 95 70 90 92 Hong Kong 5.0 1 3,760 7.0 2.4 7.9 90 76 55 93 Singapore 2.4 1 3,830 7.4 1.1 5.5 71 159 94 Greece 9.3 132 3,960 5.9 3.2 14.1 74 118 95 Israel 3.8 21 4,150 4.0 6.2 34.3 72 110 96 Spain 37.0 505 4,380 4.7 8.2 15.9 73 125 Industrial market economies 671.2 t 30,430 t 9,440w 4.0w 4.3 m 9.4 m 99w 74 w 110 w 97 Ireland 3.3 70 4,210 3.2 5.2 14.6 98 73 121 98 Italy 56.8 301 5,250 3.6 4.4 15.6 98 73 105 99 New Zealand 3.2 269 5,930 1.9 3.3 12.3 99 73 106 100 United Kingdom 55.9 245 6,320 2.2 4.1 13.9 99 73 115 101 Finland 4.8 337 8,160 4.1 5.6 12.9 100 73 105 102 Austria 7.5 84 8,630 4.1 3.7 6.5 99 72 107 103 Japan 115.7 372 8,810 9.4 4.9 8.2 99 76 98 104 Australia 14.3 7,687 9,120 2.8 3.1 11.7 100 74 124 105 Canada 23.7 9,976 9,640 3.5 3.1 9.1 99 74 109 106 France 53.4 547 9,950 4.0 4.2 9.6 99 74 109 107 Netherlands 14.0 41 10,230 3.4 5.4 8.3 99 75 122 108 United States 223.6 9,363 10,630 2.4 2.8 6.9 99 74 116 109 Norway 4.1 324 10,700 3.5 4.3 8.2 99 75 115 110 Belgium 9.8 31 10,920 3.9 3.6 8.1 99 72 104 111 Germany, Fed. Rep. 61.2 249 11,730 3.3 3.2 5.3 99 73 109 112 Denmark 5.1 43 11,900 3.4 5.5 9.8 99 75 107 113 Sweden 8.3 450 11,930 2.4 4.4 9.8 99 76 113 114 Switzerland 6.5 41 13,920 2.1 4.4 5,4 99 75 115 Capital-surplus oil exporters 25.4 t 4,363 t 5,470 w 5.0w 1.7 n, 18.2 Tn 56w 93w 115 Iraq 12.6 435 2,410 4.6 1.7 14.1 56 86 116 Saudi Arabia 8.6 2,150 7,280 6.3 . . 25.2 . . 54 96 117 Libya 2.9 1,760 8,170 5.8 5.2 18.7 50 56 113 118 Kuwait 1.3 18 17,100 -1.6 0.6 17.7 60 70 Nonmarket industrial economies 351.2 t 23,266 1 4,230w 4,3w . . 72 w 111 w 119 Bulgaria 9.0 111 3,690 5.6 . . 73 112 120 Poland 35.4 313 3,830 5.2 . . 98 72 106 121 Hungary 10.7 93 3,850 4,8 98 71 127 122 USSR 264.1 22,402 4,110 4.1 100 73 110 123 Czechoslovakia 15.2 128 5,290 4.1 . . . . . . 71 117 124 German Dem. Rep. 16.8 108 6,430 4.7 . . . . 72 128 a. Figures in italics are for 1961-70, not 1960-70. b. Figures in italics are for years other than 1976. See the technical notes. :1.35 Table 2. Growth of Production Average annual growth rate (percent) GOP Agriculture Industry Manufacturing Services 196O7O 1970_79b 196O7O 1970_79b 1960_70a 1970_79b 1960_70a 1970_79b 196O-7O 1970_79b Low-income countries 4.5w 47w 2.5m 2.Oni 6.6m 4.2ni 6.5 in 3.7 iii 3.8 ni 4.5 in China and India 4.5w 4.9w 1.8m 2.7in 8.8 in 6.6 in 3.9 ii 4.1 in Other low-income 4.3 w 3.8 w 2.7 in 1.9 in 6.6 in 3.6 in 6.6 in 3.6 in 3.8 in 4.6 in 1 Kampuchea, Dem. 3.1 2 Lao PDR 3 Bhutan 4 Bangladesh 3 3.3 1.9 7.0 6.6 5.9 4. 5 Chad 0.5 -0.2 . . 0.7 . . 0.2 . - -1.2 -2.6 6 Ethiopia 4.4 1.9 2.2 0.4 7.4 0.4 8.0 1,3 4.6 7 Nepal 2.5 27 . . 0.8 . . . 8 Somalia 1.0 3.1 -1.5 2.7 3.3 -2.6 14.3 9 Mali 3.3 5.0 . - 4.2 . - 4.2 . 6.1 10 Burma 2.6 4.3 4.1 3.9 2.8 5.4 3.3 5.0 4.3 11 Afghanistan 2.0 4.5 12 Viet Nam 13 Burundi .o '.e 4:. ó 14 Upper Volta 3.0 -0.1 . - -3.3 . . 1.0 . - 2.3 - 2.9 15 India 3.4 3.4 1.9 2.1 5.5 4.4 4.8 4.5 4.6 4.5 16 Malawi 4.9 6.3 4.1 7.0 6.7 9.1 17 Rwanda 2.7 4.1 .. .. .. 18 Sri Lanka 4.6 3.8 3.0 2.6 6.6 3.6 6.3 1.7 4. 4. 19 Benin 2.6 3.3 . . . . . . . . . 20 Mozambique 4.6 -2.9 2.1 -1.8 9.5 -5.6 6.6 -5.8 -a. o 21 Sierra Leone 4.3 1.6 . . 2.3 . . -3.8 4.4 4.4 22 China 5.2 5.8 1.6 3.2 11.2 8.7 . a. 3.7 23 Haiti -0.2 4.0 -0.6 2.2 0.1 8,3 -0.1 7.1 0.9 3.7 24 Pakistan 6.7 4.5 4.9 2.1 10.0 4.9 9.4 3.7 7.0 6.3 25 Tanzania 6.0 4.9 4.9 1.9 3.6 5.9 26 Zaire 3.6 -0.7 1.2 -1.1 -1.5 (.) 27 Niger 2.9 3.7 3.3 -1.5 13.9 10.2 (.) 4.6 28 Guinea 3.5 3.6 29 Central African Rep. 1.9 3.3 1'.e 3:.:l 30 Madagascar 2.7 0.3 0.1 1.0 0.1 31 Uganda 5.9 -0.4 0.8 -7,9 -5.0 0.1 32 Mauritania 1.8 -1.4 - 0.1 1.0 7.2 33 Lesotho 4. è 7.0 1.8 7.0 10.2 13.9 34 Togo 8.5 3.6 - 0.3 7.8 4.0 35 Indonesia 3.9 7.6 2.7 3.6 5.2 11.3 125 4.8 9.2 36 Sudan 1.3 4.3 2.7 3.3 1.5 6.9 Middle-income countries 6.1 w 5.5 w 3.6 in 3.0 in 7.4 in 6.5 in 7.0 in 6.6 in 5.5m 6.0i Oil exporters 6.5 w 5.5 w 3.4 in 2.2 in 7.6 in 7.8 in 7.0 in 8.2 in 5.lni 7.2ir Oil importers 5.9 w 5.5 w 3.9 in 3,3 in 7.1 in 5.7 in 7.5 in 6.6 in 5.7 in 5.7 i 37 Kenya 6.0 6.5 5,4 10.2 11.4 5.8 38 Ghana 2.1 -0.1 -0.2 -1.5 4.4 1.0 39 Yemen Arab Rep. - 8.4 - 4.5 13.5 . . 12.8 . . 11.0 40 Senegal 2.5 2.5 2.9 3.6 4.4 3.5 6.2 - . 1.7 1.6 41 Angola 4.8 -9.2 4.0 -10.2 11.0 -3.9 7.2 -12.0 4.2 -10.9 42 Zimbabwe 4.3 1.6 -0.5 1.8 . . 2.8 . . 2.1 43 Egypt 4.2 7.6 2.9 2.2 5.3 7.8 4.7 8.2 4.7 11.6 44 Yemen, PDR 45 Liberia 5.1 1_, o . 46 Zambia 5.0 1.5 - 2.3 - 1.5 . - 0.4 . - 1.2 47 Honduras 5.3 3.5 5.7 1.3 5.4 5.0 4.5 5.5 4.8 4.4 48 Bolivia 5.2 5.2 3.0 3.1 6.2 4.8 5.4 6.7 5.4 6.0 49 Cameroon 3.7 5.4 - 3.5 6.5 . . 5.4 . - 6.3 50 Thailand 8.2 7.7 5.5 5.4 11.6 10.4 11.0 11.4 9.0 7.7 51 Philippines 5.1 6.2 4.3 4.9 6.0 8.4 6.7 6.7 5.2 5.4 52 Congo, People's Rep. 2.7 2.9 1.0 0.1 7.0 10.6 6.8 2.2 2.1 -0.1 53 Nicaragua 7.2 2.6 6.7 4.2 11.0 3.2 11.1 3,3 5.7 1.3 54 Papua New Guinea 6.5 2.2 55 El Salvador 5.9 4.9 .ó a2 o . 4, 5.1 56 Nigeria 3.1 7.5 -0.4 -0.3 12.0 11.2 9.1 11.8 4.9 11.0 57 Peru 4.9 3.1 3.7 0.1 5.0 3.7 5.7 3.2 5.3 3.6 58 Morocco 4.2 6.1 4.7 -0.3 4.0 7.3 3.8 6.3 4.0 7.4 59 Mongolia 2.8 6.0 60 Albania 7.3 6.8 61 Dominican Rep. 4.5 7.5 .o io. ,o . o 7. 62 Colombia 5.1 6.0 3.5 4.8 6.0 5.0 5.7 6.6 5.7 7.2 63 Guatemala 5.6 5.9 4.3 5.1 7.8 8.0 8.2 6.6 5.5 5.5 64 Syrian Arab Rep. 5.7 9.0 4.4 6.4 6.3 10.8 5.6 13.2 6.2 9.1 136 Average annual growth rate (percent) GDP Agriculture Industry Manufacturing Services 1960_70a 1970_79b 1960_70a 1970_79b 1960_70a 197O79b 1960_70a 1970_79b 196O_7Oa 1970_79b 65 Ivory Coast 8.0 6.7 4.2 3.4 11.5 10.5 11.6 7.2 9.7 7.0 66 Ecuador 8.3 0.7 13.4 10.2 8.6 67 Paraguay 4.2 8.3 6.8 9.9 7.4 8.6 68 Tunisia 4,7 7.6 §. a 5.1 8.2 8.6 7.8 10.6 4 8.1 69 Korea, Oem. Rep. 7.8 6.2 70 Jordan 71 Lebanon 72 Jamaica 4.5 -0.9 1.5 1.3 5.0 -3.1 5.7 -1.3 4.] 0.2 73 Turkey 6.0 6.6 2.5 3.7 9.6 7.9 10.9 7.7 6.9 7.5 74 Malaysia 6.5 7.9 . . 5.0 . . 9.9 . . 12.4 . . 8.4 75 Panama 7.8 3.4 5.7 2.2 10.1 0.5 10.5 -0.6 7.6 4.9 76 Cuba 1.1 6.0 .. .. .. .. 77 Korea, Rep, of 8.6 10.3 4.4 4.8 17.2 16.5 17.6 17.8 8.9 8.8 78 Algeria 4.6 5.8 0.4 0.6 12.9 6.5 7.7 8.8 -3.0 6.1 79 Mexico 7.2 5.1 3.8 2.2 9.1 6.4 9.4 6.4 6.9 4.7 80 Chile 4.5 1.9 2.6 3.5 5.0 0.3 5.5 -1.0 4.5 2.8 81 South Africa 6.4 3.6 . . . . . 82 Brazil 5.4 8.7 . . 5.0 . . 9.6 . . 10.9 . . 8.7 83 Costa Rica 6.5 6.0 5.7 2.6 9.4 8.5 10.6 8.4 5.7 6.0 84 Romania 8.6 10.6 . . 6.2 . . 11.2 . . . . . 85 Uruguay 1.2 2.5 1.9 0.2 1.1 4.2 1.5 3.9 1.0 2.0 86 Iran 11.3 . . 4.4 . . 13.4 . . 12.0 . . 10.0 87 Portugal 6.2 4.5 1.3 -1.5 8.8 4.6 8.9 4.6 5,9 6.3 88 Argentina 4.2 2.5 2.2 2.5 5.9 2.4 5.7 1.9 3.4 2.5 89 Yugoslavia 5.8 5.9 3.3 3.0 6.3 7.2 5.7 7.6 6.9 5.7 90 Venezuela 6.0 5.5 5.8 3.8 4.6 3.1 6.4 5.7 7.3 7.2 91 Trinidad and Tobago 3.9 5.2 .. .. .. 92 Hong Kong 10.0 9.4 . . -11.0 . . 4.3 . . 6.1 . . 10.1 93 Singapore 8.8 8.4 5.0 1.7 12.5 8.6 13.0 9.3 7.7 8.5 94 Greece 6.9 4.9 3.5 1.4 9.4 5.3 10.2 6.4 7.1 5.7 95 Israel 8.1 4.6 . . . . . 96 Spain 7.1 4.4 . . 2.5 4.3 6.6 . . 4.9 Industrial market economies 5.1 iv 3.2w 1.3 in 0.9 in 6.2 in 3.2 in 6.2 m 3.0 in 4.8 in 3.4 in 97 Ireland 4.2 3.7 0.9 . . 6.1 . . . . . . 4.3 98 Italy 5.3 2.9 2.8 0.8 6.2 2.8 7.2 5.1 3.3 99 New Zealand 3.9 2.4 . . . . . . . . . . . . . 100 United Kingdom 2.9 2.1 2.3 0.8 3.1 1.3 3.4 0.6 2.7 2.4 101 Finland 4.6 2.8 0.6 -0.9 6.3 3.2 6.2 2.8 5.3 3,9 102 Austria 4,5 3.7 1.2 2.0 4.9 3.4 4.8 3.5 4.5 4.2 103 Japan 10.5 5.2 4.0 1.1 10.9 5.6 11.0 6.2 11.7 4.9 104 Australia 5.5 3.2 2.7 . . 4.6 . . 5.6 . . 4.0 105 Canada 5.6 4.2 2.5 2.2 6.8 3.5 6.7 3.5 5,5 4,7 106 France 5.7 3.7 1.8 0.1 6.4 3.2 6.6 3.7 5.7 4.3 107 Netherlands 5.5 3.1 2.9 3.7 6.8 3.3 6.6 3.0 5.1 3.3 108 United States 4.3 3.1 0.3 0.9 5.2 2.7 5.3 2.9 4.3 3.4 109 Norway 4.9 4.8 0.1 2.1 5.5 4.9 5.3 1.7 5.0 4.6 110 Belgium 4.8 3.2 -0.5 -0.7 6.0 3.3 6.2 3.2 4.6 3.3 111 Germany, Fed. Rep. 4.4 2.6 1.5 1.5 5.2 2.1 5.4 2.0 4.2 1.7 112 Denmark 4.7 2.8 0.2 . . 5.5 . . 5.4 . . 4.9 113 Sweden 4.4 2.0 0.6 -1.3 6.2 0.9 6.2 0.8 3.9 2.8 114 Switzerland 4.3 0.2 Capital-surplus oil exporters 6.5 w 4.2 in 11.1 in 14.4in .. 11.9in 115 Iraq 6.1 10.5 5.7 -1.8 4,7 13.6 5.9 14.4 8.3 10.4 116 Saudi Arabia 11.1 4,2 11.1 5.9 11.9 117 Libya 24.4 1.9 11.8 -1.7 18.9 16.4 118 Kuwait 5.7 2.0 Nonmarket industrial economies 4.8 w 5.2 w 119 Bulgaria 5.9 6.2 120 Poland 4.3 6.1 121 Hungary 3.8 5,3 122 USSR 5.2 5.1 123 Czechoslovakia 3.1 4.8 124 German Oem. Rep. 3.1 4.5 a. Figures in italics are for 1961-70, not 1960-70. b. Figures in italics are for 1970-78, not 1970-79. 137 Table 3. Structure of Production Distribution of gross domestic product (percent) GDP (millions of dollars) Agriculture Industry (Manufacturing)a Services 1960b 1979C 1960b 1979C 1960b 1979C (1960b 1979C) 1960b 1979C Low-income countries 51w 34w 17w 36w 11w 13w 32w 30u China and India 33w 41w 26u Other low-income 52w 38w 13w 23w 9w 9w 35w 39u 1 Kampuchea, Dem. 0 2LaoPDR 3 Bhutan .. .. .. .. 4 Bangladesh 3,100 7,670 61 56 8 13 6 8 31 31 5 Chad 180 570 52 70 12 11 4 8 36 19 6 Ethiopia 900 3,530 65 46 12 15 6 9 23 39 7 Nepal 410 1,760 58 8 Somalia 160 1,030 67 60 13 11 3 7 20 29 9 Mali 270 1,220 55 42 10 11 5 6 35 47 10 Burma 1,280 4,950 33 45 12 14 8 10 55 41 11 Afghanistan 1,190 3,760 12 Viet Nam . . . . . . . . 13 Borundi 190 730 . . 55 . . 15 . . 10 . . 30 14 Upper Volta 200 860 62 38 14 20 8 14 24 42 15 India 29,550 112,000 50 38 20 27 14 18 30 35 16 Malawi 170 1,220 58 43 11 20 6 12 31 37 17 Rwanda 120 860 81 42 7 21 1 15 12 37 18 Sri Lanka 1,500 3,160 32 27 20 31 15 21 48 42 19 Benin 160 850 55 43 8 12 3 8 37 45 20 Mozambique 830 2,360 55 44 9 16 8 9 36 40 21 Sierra Leone 790 36 . . 23 5 . . 41 22 China . . 252,230 31 47 22 23 Haiti 270 1,180 . . . . . . . . . . . . . 0 24 Pakistan 3,500 17,940 46 32 16 24 12 16 38 44 25 Tanzania 550 4,130 57 54 11 13 5 9 32 33 26 Zaire 130 6,020 30 33 27 24 13 4 43 43 27 Niger 250 1,710 69 44 9 32 4 10 22 24 28 Guinea 370 1,540 . 41 . . 26 . 5 . . 33 29 Central African Rep. 110 640 51 37 10 18 4 8 39 45 30 Madagascar 540 2,810 37 34 10 20 4 . . 53 46 31 Uganda 540 8,410 52 55 13 7 9 6 35 38 32 Mauritania 70 470 . . 27 33 . . 8 40 33 Lesotho 30 240 73 36 . . 15 . . 2 . . 49 34 Togo 120 1,000 55 25 16 23 8 7 29 52 35 Indonesia 8,670 49,210 54 30 14 33 8 9 32 37 36 Sudan 1,470 7,640 58 38 15 13 5 6 27 49 Middle-income countries 22w 14w 30w 38w 21 w 24w 47w 48w Oil exporters 23w 14w 26w 42w 17w 19w 51w 44w Oil importers 21 w 14w 32 w 36w 23w 26w 46w 50w 37 Kenya 730 5,280 38 34 18 21 9 13 44 45 38 Ghana 1,220 10,160 41 66 21 10 13 39 Yemen Arab Rep. . . 2,910 . . 32 . . . . 5 . 0 40 Senegal 610 2,480 24 29 17 24 12 19 59 47 41 Angola 690 2,490 50 48 8 23 4 3 42 29 42 Zimbabwe 780 3,640 18 12 35 39 17 25 47 49 43 Egypt 3,880 17,050 30 23 24 35 20 28 46 42 44 Yemen, PDR . . 520 13 26 11 61 45 Liberia 220 940 . . 35 . . 26 . 6 . . 39 46 Zambia 680 3,240 11 15 63 41 4 16 26 44 47 Honduras 300 1,900 37 32 19 26 13 17 44 42 48 Bolivia 460 4,930 26 1] 25 29 15 13 49 54 49 Cameroon 550 5,330 . . 32 . . 16 . 9 . . 52 50 Thailand 2,560 27,640 40 26 19 28 13 19 41 46 51 Philippines 6,980 29,380 26 24 28 35 20 24 46 41 52 Congo, People's Rep. 130 1,120 23 13 17 36 10 16 60 51 53 Nicaragua 340 1,560 24 29 21 28 16 24 55 43 54 Papua New Guinea 230 2,050 49 37 13 . . 3 8 38 55 El Salvador 570 3,520 32 28 19 22 15 15 49 50 56 Nigeria 3,150 75,170 63 22 11 45 5 5 26 33 57 Peru 2,410 14,770 18 10 33 43 24 26 49 47 58 Morocco 2,040 14,950 23 19 27 32 16 17 50 49 59 Mongolia 60 Albania . . . . . . . . . . . . . . . 61 Dominican Rep. 720 5,230 27 19 23 26 17 16 50 55 62 Colombia 4,010 25,250 34 29 26 28 17 21 40 43 63 Guatemala 1,040 6,890 . . . . 64 Syrian Arab Rep. 800 9,110 . . 16 . . 22 62 138 Distribution of gross domestic product (percent) GDP (millions of dollars) Agriculture Industry (Manufacturing) Services 1960b 1979C 1960b 1979C 1960b 1979C (1960" 1979C) 1960b 1979C 65 Ivory Coast 570 9,130 43 26 14 23 7 12 43 51 66 Ecuador 910 9,510 33 15 19 37 14 19 48 48 67 Paraguay 300 3,420 36 31 20 24 17 16 44 45 68 Tunisia 770 6,070 24 16 18 33 8 12 58 51 69 Korea, Dem. Rep. 70 Jordan 1,870 . . 8 . . 32 . . 16 . . 60 71 Lebanon 830 . . 12 . . 20 . . 13 . . 68 72 Jamaica 700 2,390 10 7 36 40 15 15 54 53 73 Turkey 8,820 56,460 41 23 21 29 13 21 38 48 74 Malaysia 2290 20,340 37 24 18 33 9 16 45 43 75 Panama 420 2,770 23 21 13 56 76 Cuba 77 Korea, Rep. of 3,810 60,660 78 Algeria 2,800 29,810 21 7 33 58 10 11 46 35 79 Mexico 12,040 121,330 16 10 29 38 23 29 55 52 80 Chile 3,780 20,920 11 8 38 37 23 24 51 55 81 South Africa 6,980 52,920 12 7 40 48 21 22 48 45 82 Brazil 24,080 204,480 16 11 35 38 26 28 49 51 83 Costa Rica 510 3,990 26 19 20 26 14 19 54 55 84 Romania 42,200 . . 14 . . 50 . . . . . . 36 85 Uruguay 1,110 6,060 19 13 28 37 21 31 53 50 86 Iran 4120 . . 29 . . 33 . . 11 . . 38 87 Portugal 2,340 18560 25 13 36 47 29 37 39 40 88 Argentina 11,080 95,120 16 13 38 46 32 37 46 41 89 Yugoslavia 9,860 61,500 24 12 45 44 36 31 31 44 90 Venezuela 7,570 48,970 6 6 22 47 . . 16 72 47 91 Trinidad and Tobago 470 4070 8 3 46 54 24 11 46 43 92 Hong Kong 950 17,390 4 1 34 . . 25 19 62 93 Singapore 700 9,010 4 2 18 36 12 28 78 62 94 Greece 3,110 33,370 23 16 26 32 16 19 51 52 95 Israel 2,030 15,300 11 5 32 36 23 24 57 59 96 Spain 10,350 180,800 9 31 60 Industrial market economies 6w 4w 40 w 37 w 30 w 27 w 54 w 59 w 97 Ireland 1,770 14,810 22 26 . 52 98 Italy 37190 323,600 13 7 41 43 31 46 50 99 New Zealand 3,760 18320 11 31 58 100 United Kingdom 71,380 401,580 4 2 43 36 32 25 53 62 101 Finland 4,940 41,410 18 8 35 35 24 26 47 57 102 Austria 6,280 68,390 11 4 49 41 38 29 40 55 103 Japan 43,060 974,040 13 5 45 42 34 30 42 53 104 Australia 16,310 127,820 12 . . 37 . . 26 51 105 Canada 39,940 227,000 6 4 34 33 23 19 60 63 106 France 60,060 571,300 10 5 38 34 29 25 52 61 107 Netherlands 11,010 149,060 9 4 46 37 34 29 45 59 108 United States 506,700 2,350,000 4 3 38 34 29 24 58 63 109 Norway 4,640 53,970 9 5 33 37 21 18 58 58 110 Belgium 11,280 110,920 6 2 41 37 30 26 53 61 111 Germany, Fed. Rep. 72,100 763,930 6 2 53 49 40 38 41 49 112 Denmark 5,900 66,230 11 . . 32 . . 22 57 113 Sweden 13,950 101,490 7 3 40 32 27 23 53 65 114 Switzerland 8,550 95,010 Capital-surplus oil exporters 2w 75w 5w 23 w 115 Iraq 1 580 30,710 17 52 73 10 6 31 19 116 Saudi Arabia 74,060 74 5 25 117 Libya 31 Ô 24,570 2 73 3 25 118 Kuwait 23,300 (.) 81 5 19 Nonmarket industrial economies 21 w 15w 62w 63w 52w 17w 22w 119 Bulgaria 32 19 53 63 46 15 18 120 Poland 26 16 57 64 47 17 20 121 Hungary 24 15 69 59 59 7 26 122 USSR 21 16 62 62 52 17 22 123 Czechoslovakia 16 8 73 .74 63 11 18 124 German Dem. Rep. 10 69 21 a. Manufacturing is a part of the industrial sector, but its share of GDP is shown separately because it typically is the most dynamic part of the industrial sector. b. Figuresin italics are for 1961, not 1960. c Figures in italics are for 1978, not 1979. 139 Table 4. Growth. of Consumption and Investment Average annual growth rate (percent) Public Private Gross consumption consumption domestic investment 1960_7Oa 1970_.79b 1960_70a 19l0_79b 196O7Oa 197O79b Low-income countries 4.4 in 4.5 in 3.7 in 3.7 in 5.2 in 6.4 in China and India 3.3 in 4.6 in 7.7 in 6.3 in Other low-income 4.5 in 4.4 in 3,7 iii 3.7 in 4.8 in 6.4 in 1 Kampuchea, Dem. 2.6 3.2 0.3 2LaoPDR 3 Bhutan . . . . . . . . . 4 Bangladesh c c 3.4 3.1 11.1 -1.4 5 Chad 4.4 -1.7 -0.7 0.3 2.3 -0.5 6 Ethiopia 4.7 4.5 4.7 4.0 5.7 -1.8 7 Nepal . . . . . . . . . . . 11.7 8 Somalia 3.7 11.7 -0.5 2.7 4.3 8.5 9 Mali 6.2 7.7 2.8 5.5 4.9 3.2 10 Burma c c 2.8 3.9 3.6 6.6 11 Afghanistan c 9.8 2.5 3.5 -1.0 12.4 12 Viet Nam . . . . . . . . . 13 Burundi 19.2 6.0 3.2 3.1 4.3 16.5 14 Upper Volta . . 3.8 . . 1.1 . . 1.2 15 India -1.5 4.5 3.9 2.7 5.5 5.8 16 Malawi 4.6 6.1 4.1 5.7 15,4 2.3 17 Rwanda 1.1 14.0 4.2 1.6 3.5 18.9 18 Sri Lanka c c 2.1 3.0 6.6 6.4 19 Benin 1.7 1.0 4.9 3.8 4.2 8.3 20 Mozambique 6.8 -4.0 4.4 -2.3 8.3 -8.4 21 Sierra Leone . . 4.5 . . 1.5 -1.3 22 China c c 2.7 5.4 9.8 6.8 23 Haiti c 0.6 -1.0 3.8 1.7 12.5 24 Pakistan 7.3 4.3 7.1 4.7 6.9 0.6 25 Tanzania c c 5.2 6.0 9.8 3.0 26 Zaire 8.5 -2.2 3.9 -1.8 9.6 -5.0 27 Niger 2.0 3.8 3.9 3.2 3.0 6.8 28 Guinea . . . . . . . 29 Central African Rep. 2.2 1.1 3.0 4.4 1.3 6. 30 Madagascar 2.7 0.2 2.0 -0.6 5.4 -1.8 31 Uganda 5.9 1.3 5.6 1,1 9.8 -13.1 32 Mauritania . . 18.9 . . 5.0 6.9 33 Lesotho 0.3 12.0 6.0 10.9 18.5 24.4 34 Togo 6.7 10.7 7.6 5.7 11.1 14.5 35 Indonesia 0.9 11.4 4.1 7.9 4.6 14.8 36 Sudan 12.1 -3.2 -1.2 7.3 -1.3 8.0 Middle-income countries 6.3 m 7.4 in 5.1 in 5.2 in 7.4 in 7.0 in Oil exporters 7.4 m 9.4 in 4.3 in 7.0 in 7.2 in 10.3 in Oil importers 6.1 in 6.4 in 5.5 in 4.6 in 7.9 in 6.0 in 37 Kenya 10.0 9.0 4.6 6.9 7.0 1.2 38 Ghana 6.1 -0.2 2.0 0.3 -3.2 -7.9 39 Yemen Arab Rep. 40 Senegal -6. ' 6. 6. i. i'. è 41 Angola 9.1 3.0 4.0 -7.9 9.7 -9.0 42 Zimbabwe 9.7 0.4 -2.1 43 Egypt 16. 5.0 7.0 6. 21.5 44 Yemen, PDR 45 Liberia t7 4 -4.2 5.2 46 Zambia 11.0 1.8 6.8 -2.2 10.6 -5.6 47 Honduras 5.3 7.4 4.8 3.8 10.2 9.6 48 Bolivia 8.9 8.0 4.1 5.2 9.6 6.3 49 Cameroon 6.1 5.4 2.7 5.3 9.3 7.9 50 Thailand 9.7 9.1 7.0 6.9 15.8 7.7 51 Philippines 5.0 8.4 4.7 4.7 8.2 10.6 52 Congo, People's Rep. 5.4 5.8 -0.3 2.8 2.9 0.2 53 Nicaragua 3.6 11.8 6.8 2.3 10.7 -2.2 54 Papua New Guinea 6.5 -1.0 6.9 2.3 21.2 -9.4 55 El Salvador 6.4 7.2 6.1 4,3 3.5 11.7 56 Nigeria 10.0 12.4 1.1 6.3 7.4 17.8 57 Peru 6.3 6.5 7.1 2.9 1.0 2.7 58 Morocco 4.5 12.5 4.0 4.5 8.0 15.2 59 Mongolia 60 Albania 61 Dominican Rep. 6.6 .6 ii'. i6. 62 Colombia 5.5 4.5 5.5 6.1 4.5 5.5 63 Guatemala 4.7 6.0 4.7 5.3 7.9 9.8 64 Syrian Arab Rep. 11.8 10.0 16.5 140 Average annual growth rate (percent) Public Private Gross consumption consumption domestic investment 1 96O7Oa 1 97f79b 1960_70a 1970_79b 1960_70a 1970_79b 65 Ivory Coast 11.8 10.0 8.0 7,3 12.7 13.8 66 Ecuador 12.1 8.9 10.3 67 Paraguay 4.8 45 7.4 5.8 18.7 68 Tunisia 5.2 9.8 3.2 8.2 4.2 11.4 69 Korea, Oem. Rep. 70 Jordan , , . , , , , 71 Lebanon 72 Jamaica 73 Turkey 5.9 8.6 6.7 8.0 6.2 . . 4.4 3.1 5.1 -0.6 . 5.2 . 6.2 7,8 8.8 -, 10.1 74 Malaysia 7.4 9.6 4.2 7.0 7.2 10.3 75 Panama 7.8 6.5 6.7 2.1 12.4 0.6 76 Cuba , . , , . , , 77 Korea, Rep. of 5.5 8.7 7.0 8.0 23.6 149 78 Algeria 1.7 9.4 4.6 11.1 1.9 11.4 79 Mexico 9.5 10.0 6.6 3.8 9.6 6.9 80 Chile 4.7 -0.5 4.8 1.9 3,7 -2.0 81 South Africa 7.1 . . 6.2 . . 9.5 82 Brazil 3.5 8.6 5.1 9.1 7.0 83 Costa Rica 8.0 6.2 6.1 5.3 7.1 9.1 84 Romania , , , , . , , . 11.2 10.7 85 Uruguay 4.4 1.5 0.7 (.) -1.8 7.5 86 Iran 16.0 . . 10.0 . . 12.2 87 Portugal 7.7 9.0 5.5 4.0 7.7 88 Argentina 1.2 12.1 4.1 -2.2 4.1 3.0 89 Yugoslavia 0.6 4.7 9.5 6.6 4.7 7.0 90 Venezuela 6.3 8.2 5.0 11.0 7.6 10.2 91 Trinidad and Tobago 6.2 , , 4.3 , , -2.8 6.3 92 Hong Kong 8.6 9.3 8.6 9.2 6.9 12.5 93 Singapore 12.6 6.4 5.4 7.2 20.5 6.0 94 Greece 6.6 7.4 7.1 4.6 10.4 2.0 95 Israel 13.8 3.9 7.4 5.7 5.7 1.0 96 Spain 3.8 5.6 7.0 4.4 11.4 2.5 Industrial market economies 4,8m 3,7m 4.3rn 3.6m 5.6m 1.4m 97 Ireland 3.9 5.5 3,7 2.8 8.8 5.2 98 Italy 3.9 3.0 6.1 2.6 3.8 0.1 99 New Zealand 100 United Kingdom d.è 101 Finland 5,7 5,4 4,3 2.8 4.3 -0.8 102 Austria 2.9 3.8 4,4 4,4 5.6 3.2 103 Japan 6.4 5.0 9.0 5.3 14.0 3.2 104 Australia 6.8 5.6 2.7 3.6 6.2 1.4 105 Canada 6.2 2.9 4.9 5.2 5.8 4.5 106 France 3.4 3.3 5.5 4.3 7.3 2.0 107 Netherlands 3.1 2.8 6.1 3.8 6.8 (.) 108 United States 4.1 1.7 4.4 3.6 4.8 1.9 109 Norway 6.4 5.3 4.1 4.1 5.1 4.3 110 Belgium 5.7 4.7 3.8 3.9 6.0 1.7 111 Germany. Fed. Rep. 4.1 3,7 4.6 2.9 4.1 0.9 112 Denmark 6.0 3.9 4.3 2.9 6.7 0.5 113 Sweden 5.4 3.2 3.8 2.0 5.0 -1.1 114 Switzerland 4.8 1.9 4,3 1.4 4.1 -3.3 Capital-surplus oil exporters 18.7m 24.8 to 115 Iraq 8.1 C 4.9 17.0 3.0 27.2 116 Saudi Arabia C 18.8 46.7 117 Libya 21.6 18.7 1 . 10.6 118 Kuwait C 22.4 Nonmarket industrial economies 119 Bulgaria 120 Poland 4 121 Hungary 6.5 4.6 7.2 122 USSR 123 Czechoslovakia 124 German Dem. Rep. a. Figures in italics are for 1961-70, not 1960-70. b. Figures in italics are for 1970-78. not 1970-79. c. Seoarate figures are not available for public consumption, which is therefore included in private consumption. 141 Table 5. Structure of Demand Distribution of gross domestic product (percent) Exports of goods Public Private Gross domestic Gross domestic and nonfactor Resource consumption consumption investment saving services balance 19600 1979b 1960a 197gb 19600 1979b 1960 197gb 1960 197gb 19600 197gb Low-income countries China and India 9 iv 11 11 iv iv 78 iv 77 iv 66 w 62 w 18 iv 21 iv 26 iv 29 iv 16 iv 19 iv 23 iv 27 iv 7w 4w 11 2 3 1w 2w iv zt Other low-income 11 iv 12 iv 82 iv 76 iv 10 iv 1 8 iv 8 iv 1 5 iv 14w 20w 2w 3w 1 Kampuchea, Dem. . 2LaoPDR 3 Bhutan .. .. .. .. .. .. 4 Bangladesh c 12 5 Chad 6 13 18 86 82 98 96 7 11 14 13 8 5 14 4 2 23 10 33 10 6 1 27 14 1 6 Ethiopia 7 Nepal 8 c 17 c 81 96 87 91 12 9 10 14 11 4 9 9 10 12 5 7 5 14 8 Somalia 9 Mali 8 12 19 23 89 79 79 82 10 14 16 15 9 3 5 2 11 12 12 16 5 20 135 10 Burma 11 Afghanistan c c c c 89 87 85 89 12 16 20 14 11 13 15 11 20 4 11 8 3 12 Viet Nam 13 Burundi 3 16 92 80 6 12 43 5 4 13 13 8 1 27 14 14 Upper Volta 15 India 10 7 14 10 94 79 89 70 10 17 24 24 4 14 20 9 5 15 . . 34 14 16 16 Mafawi 1] Rwanda 18 Sri Lanka 16 10 17 16 88 82 70 72 6 10 29 19 8 13 12 21 12 21 25 5 2 127 6 2 20 13 9 78 77 14 26 9 14 43 34 19 Benin 20 Mozambique 16 11 12 15 75 81 87 85 15 10 21 10 9 8 1 (.) 12 14 27 13 10 21 Sierra Leone 11 22 China 23 Haiti c . 18 11 . 77 . 78 59 23 . 31 15 23 . 30 4 4 . 24 6 2 (.) . 121 . 24 Pakistan 25 Tanzania 9 c 11 10 11 16 93 84 72 81 83 76 9 12 14 21 18 21 19 7 5 9 6 8 20 8 31 16 11 14 7 13 5 13 26 Zaire 27 Niger 28 Guinea 18 .. 9 c 9 16 61 79 .. 88 72 70 12 13 .. 28 15 9 21 12 .. 12 19 14 55 .. 9 30 25 24 19 1 .. 9 3 29 Central African Rep. 30 Madagascar 19 20 20 17 72 75 72 73 20 11 20 22 9 5 8 10 23 12 18 17 11 6 1212 31 Uganda 9 c 75 96 11 4 16 4 26 4 5 (.) 32 Mauritania 39 47 51 25 59 14 38 37 27 88 . . . . . . . . . . . . 33 Lesotho 34 Togo 35 Indonesia 17 12 8 16 15 108 88 80 143 74 59 11 2 8 29 39 4 8 11 12 19 21 32 7 28 36 Sudan 6 11 11 85 84 9 23 14 9 30 5 13 12 30 9 (.) (.) 9 7 Middle-income countries 11 iv 13w 70w 62w 21 iv 26 iv 19 iv 25 iv 16w 20w 2 iv 1 w Oil exporters 10 iv 13 iv 68 w 58 iv 20 w 30 iv 22 iv 29 iv 21 iv 25 w 2 w 1 iv 18w 2 iv -3w 3 7 7 Oil importers 11 iv 14 iv 70w 64 iv 21 iv 25 w 19w 22w 14w 37 Kenya 11 20 72 65 20 22 17 15 31 26 38 Ghana 10 9 73 86 24 5 17 5 28 12 (.) 39 Yemen Arab Rep. .. .. .. .. .. .. .. .. .. 40 Senegal 41 Angola 17 9 c 26 68 77 98 56 16 12 21 9 15 14 2 18 40 20 34 43 1 19 42 Zimbabwe 43 Egypt 11 17 13 19 67 71 63 65 23 13 31 15 22 12 24 16 . 20 . . 31 . 1 1 15 2 9 5 43 44 Yemen, PDR 45 Liberia . 7 . . . 15 58 . . . 62 . . 28 . . 27 . . . 35 . . 23 . 39 . . 53 . 74 46 Zambia 47 Honduras 48 Bolivia 11 11 7 27 12 12 48 77 86 45 64 74 25 14 14 21 28 20 41 12 7 28 24 14 56 22 13 45 38 17 2 7 154 6 16 7 49 Cameroon 50 Thailand 51 Philippines . . 10 8 10 12 9 . 76 76 . 80 67 67 . 16 16 . 25 28 29 . 14 16 . 10 21 24 . 17 11 . 25 23 19 (.) 7 2 5 . . 52 Congo, People's Rep. 53 Nicaragua 23 9 30 17 98 79 58 71 45 15 122 21 12 12 12 21 24 . 37 . 3 10 66 13 11 54 Papua New Guinea 55 El Salvador 56 Nigeria 28 10 6 27 12 10 70 79 87 55 68 58 13 16 13 15 19 31 11 2 7 18 20 32 17 20 15 52 36 25 5 6 3 1 1 57 Peru 9 10 64 66 25 14 27 24 20 27 2 10 58 Morocco 59 Mongolia 12 23 77 68 10 23 11 9 24 18 1 14 60 Albania 61 Dominican Rep. .& b th 7 62 Colombia 63 Guatemala 64 Syrian Arab Rep. 6 8 7 7 19 73 84 . . 67 79 71 21 10 24 19 28 21 8 26 14 10 16 13 18 21 20 2 18 5 (.) . . 2 142 Distribution of gross domestic product (percent) Exports of goods Public Private Gross domestic Gross domestic and nonfactor Resource consumption consumption investment saving services balance 196O 197gb 1960a 197gb 1960 197gb 1960a 197gb 196O 1g79b 196O 197gb 65 Ivory Coast 10 17 73 56 15 31 17 27 37 35 2 2 4 2 66 Ecuador 67 Paraguay 68 Tunisia 10 8 17 12 16 6 74 76 76 61 74 61 14 17 17 29 29 29 16 16 7 20 23 27 20 17 18 24 11 38 1 9 10 6 69 Korea, Dem. Rep, 70 Jordan . 33 . 93 48 26 51 74 31 4 . . . . . . . 71 Lebanon 10 85 16 5 27 11 5 . . . . . . . . 72 Jamaica 7 20 67 63 30 18 26 17 34 49 73 Turkey 11 13 76 71 16 21 13 16 3 5 74 Malaysia 11 15 62 51 14 25 27 34 54 58 13 75 Panama .. 11 18 .. 78 .. 63 .. 16 .. 29 .. 11 .. 19 31 44 5 10 9 76 Cuba 77 Korea, Rep. of 15 11 84 61 11 35 28 .. .. 3 30 10 83 7 2 2 1 78 Algeria 16 14 50 45 42 44 34 41 28 32 79 Mexico 80 Chile 6 11 12 14 76 75 62 71 20 17 28 16 18 14 26 15 10 14 12 23 31 81 South Africa 82 Brazil 9 12 13 10 64 67 52 69 22 22 25 23 27 21 35 21 30 5 35 7 1 2 5 12 5 10 83 Costa Rica 84 Romania 85 Uruguay 10 . 9 . 18 . . 13 77 . 79 69 . . 76 . 18 18 . 35 25 17 . 13 . 12 13 . 11 . 14 21 . . 27 25 17 66 . 3. 86 Iran 87 Portugal 10 11 .. 15 69 77 .. 73 17 19 .. 21 21 12 .. 12 19 17 .. 26 7 1 9 4 88 Argentina 89 Yugoslavia 90 Venezuela 19 14 9 24 17 14 70 49 53 41 54 52 22 37 21 26 38 34 21 32 33 35 29 34 10 14 32 13 14 31 59 12 9 (.) 91 Trinidad and Tobago 9 15 61 43 28 29 30 42 37 48 2 13 92 Hong Kong 7 6 87 66 18 28 3 6 28 82 12 93 Singapore 94 Greece 8 12 11 16 95 77 63 63 11 19 39 30 11 26 21 163 9 . 187 17 14 8 13 9 (.) 95 Israel 96 Spain 18 9 32 11 68 69 58 68 27 19 26 20 14 22 10 21 14 11 41 15 13 163 1 Industrial market economies 15w 17w 63w 61 w 21 w 23w 22w 22w 12w 19w 1w1w 97 Ireland 12 20 77 63 16 33 11 17 31 54 5 16 98 Italy 99 New Zealand 100 United Kingdom 12 13 16 16 64 65 61 61 24 24 22 22 24 22 23 23 15 23 28 27 2 (.) 2 1 1 101 Finland 17 13 20 18 66 58 60 55 19 30 19 25 17 29 20 27 21 23 29 33 1 1 102 Austria 13 18 59 56 28 27 28 26 24 37 (.) 1 2 2 103 Japan 104 Australia 105 Canada 9 10 14 10 16 19 57 65 65 59 60 56 34 29 23 33 23 24 34 25 21 31 24 25 11 15 18 12 19 28 3 (.) 2 1 1 106 France 13 15 61 62 24 23 26 23 15 22 2 (.) 107 Netherlands 14 19 57 60 27 22 29 21 50 52 1 1 2 108 United States 109 Norway 110 Belgium 17 12 13 20 18 18 64 60 69 64 49 63 18 30 19 29 21 19 19 28 18 18 31 19 5 41 33 9 45 55 2 12 1 2 1 13 111 Germany, Fed. Rep. 14 20 57 55 27 25 29 25 19 26 2 (.) 112 Denmark 113 Sweden 114 Switzerland 12 16 9 25 30 13 66 60 62 56 53 64 23 25 29 22 20 24 2? 24 29 19 17 23 34 23 29 29 31 35 3 1 (.) Capital-surplus oil exporters 22w 27w 28w 56w 65w 28w 115 Iraq 18 c 48 41 20 33 34 59 42 63 14 26 116 Saudi Arabia 23 26 33 51 60 18 117 Libya 27 21 . 21 . . 52 . . 70 31 118 Kuwait . . 14 17 12 69 79 . . 57 Nonmarket industrial economies 3w lOw 70w 72w 25w 25w 27w 26w 2w 119 Bulgaria 120 Poland 121 Hungary 3 8 7 . 13 . 8 69 68 72 . 64 64 . 27 24 24 . 26 37 . 28 24 21 . 23 28 . 3 39 (.) 1 122 USSR 2 c 70 74 26 24 28 26 2 2 123 Czechoslovakia 6 7 75 67 17 24 19 26 2 2 124 German Dem. Rep. a. Figures in italics are for 1961, not 1960. b. Figures in italics are for 1978. not 1979. c. Separate figures are not available for public consumption, which is therefore included in private consumption. 143 Table 6. Industrialization Distribution of manufacturing value added (percent, 1975 prices) Gross Value added manufacturing Machinery in manufacturing Textiles and output Food and (millions of per capita and transport Other 1975 dollars) (1975 dollars) agriculture clothing equipment Chemicals manufacturing 1978a 1978a 1978a 1978a 1978a 1970 1978a 1970 1977b Low-income countries China and India Other low-income 1 Kampuchea, Dem. 2 Lao PDR 3 Bhutan 4 Bangladesh 729 874 5 Chad 37 47 6 Ethiopia . . . . 236 273 19 21 7 Nepal . . . . . . 8 Somalia 22 37 12 22 9Mali .. .. .. . .. 44 66 10 Burma 35 16 1 5 43 285 402 11 Afghanistan 12 Viet Nam . . . . . . . . . 13 Burundi . . 23 35 14 Upper Volta . . . . . . . . 63 79 15 India 12 17 18 12 41 10397 15068 75 91 16 Malawi 51 12 37 56 93 43 17 Rwanda . . . . . . . . 113 90 75 18 Sri Lanka 38 15 . . 4 43 556 644 19 Benin . . . . . . . . . . 53 20 Mozambique 48 14 . . 6 32 246 224 66 21 Sierra Leone . . . . . . 25 35 22 China . . . . . . . . . . . . 190 23 Haiti 30 20 . . 1 49 . 24 Pakistan 41 17 . . 14 28 1,482 1,966 . 25 Tanzania 34 23 9 4 30 190 275 44 26 Zaire 43 20 . . 9 28 186 187 27 Niger . . . . 67 146 28 Guinea . . . . . . . . . 55 29 Central African Rep. 48 33 3 16 54 39 . . 42 30 Madagascar 28 72 298 321 101 102 31 Uganda 222 150 32 Mauritania . . . . . . 30 38 33 Lesotho 4 5 34Togo .. .. .. .. 32 57 37 35 Indonesia 26 10 . . 64 1,517 3,755 50 78 36 Sudan 49 29 3 19 305 477 62 Middle-income countries Oil exporters Oil importers 37 Kenya 26 9 30 7 28 199 532 63 157 38 Ghana 34 . . . . 66 601 815 138 39 Yemen Arab Rep. . . . . . . . . 31 84 40 Senegal 44 18 9 29 276 338 41 Angola . . 158 80 42 Zimbabwe 22 17 9 11 41 519 707 248 264 43 Egypt 21 28 12 8 31 1,758 3,178 194 44 Yemen, PDR .. .. 45 Liberia . . . . . . . . . . 25 45 . . 46 Zambia 16 17 11 13 43 275 321 163 47 Honduras 42 15 1 6 36 137 209 48 Bolivia . . . . . . . . . . 238 391 148 49 Cameroon 37 15 2 8 38 201 312 . . 50 Thailand . . . . . . . . . 1,545 3,795 198 51 Philippines 38 11 8 10 33 2,805 4,761 192 541 52 Congo, People's Rep. 22 . . . . 9 69 57 71 107 53 Nicaragua 48 14 2 9 27 263 399 381 54 Papua New Guinea . . . . 55 El Salvador 252 368 . . 189 56 Nigeria . . . . . . . . . . 1,199 2,835 39 73 57 Peru 28 14 11 11 36 2,911 3,685 525 545 58 Morocco 33 15 9 9 34 1,084 1,802 59 Mongolia 29 32 5 34 60 Albania 61 Dominican Rep. 483 843 234 404 62 Colombia 31 17 11 12 29 1,784 3,078 198 276 63 Guatemala 64 Syrian Arab Rep. 28 36 2 333 887 164 407 144 Distribution of manufacturing value added (percent, 1975 prices) Gross Value added manufacturing Machinery in manufacturing output Textiles and (millions of per capita Food and and transport Other 1975 dollars) (1975 dollars) agriculture clothing equipment Chemicals manufacturing 1978a 1978a 1978a 1978a 1978a 1970 1978a 1970 1977b 65 Ivory Coast . . . . . . . 398 707 . . 278 66 Ecuador 31 14 9 7 39 424 888 186 242 67 Paraguay 37 16 6 5 36 182 319 . 68 Tunisia 26 16 7 17 34 222 538 174 298 69 Korea, Dem. Rep. . 70 Jordan . . . . . . . 71 Lebanon .. .. .. .. 72 Jamaica 44 16 6 8 26 428 398 . 674 73 Turkey 26 11 . . . . 63 3714 7,041 204 438 74 Malaysia 21 9 17 5 48 923 2,363 303 75 Panama 52 11 2 6 29 252 254 419 603 76 Cuba .. .. .. .. .. .. 77 Korea, Rep. of 19 20 19 11 31 2,346 9,064 182 567 78 Algeria 29 20 8 4 39 967 2,220 79 Mexico 22 11 17 14 36 15,416 24,856 . 80 Chile 19 7 13 9 52 2,456 2,561 438 365 81 South Africa 15 11 17 10 47 . . . . . 82 Brazil 14 10 28 11 37 13,852 37,685 410 83 Costa Rica . . . . . . . . . 261 516 84 Romania 12 14 31 13 30 . . . . . 85 Uruguay 27 25 8 8 32 797 1,008 . . 916 86 Iran 14 13 10 7 56 2,601 7,030 243 87 Portugal 13 18 20 12 37 3,496 5,308 . . 1,573 88 Argentina 11 13 26 13 37 9,174 10,641 . 89 Yugoslavia 15 14 21 8 42 6,556 11,740 833 1,686 90 Venezuela 18 9 7 7 59 3,302 5,355 91 Trinidad and Tobago 13 4 10 7 66 416 413 92 Hong Kong . . . . . . . . 1,490 2,629 1,413 93 Singapore 6 5 43 5 41 827 1,815 1,628 2,874 94 Greece 20 26 8 9 37 2,540 4,348 770 95 Israel 13 13 24 8 42 . . 96 Spain 11 18 20 10 41 18,331 32,808 1,704 2,650 Industrial market economies 97 Ireland 26 14 11 15 34 2,079 . . . 98 Italy 10 14 27 9 40 51,192 66,696 2,204 2,944 99 New Zealand 26 11 17 5 41 . . . . . 100 United Kingdom 14 8 29 11 38 55,997 61,743 2,436 2,796 101 Finland 13 8 23 7 49 5,636 7,084 3,449 4,056 102 Austria 14 9 22 7 48 9,402 12,400 3,292 4,836 103 Japan 9 7 33 10 41 115,465 190,085 2,866 4,413 104 Australia 18 8 21 9 45 15,895 . . 3,202 105 Canada 13 7 23 8 49 26,023 36,834 3,016 4,021 106 France 16 8 32 9 35 75,800 104,703 . . 4,546 107 Netherlands 18 4 26 15 37 19,114 25,258 4,443 5,219 108 United States 11 6 32 11 40 331,522 434,359 3,401 4,447 109 Norway 13 4 28 7 48 5,322 6,031 3,500 5,165 110 Belgium 17 8 28 12 35 14,403 18,749 . . 111 Germany, Fed. Rep. 9 6 3] 13 35 149,071 176,010 4,297 5,731 112 Denmark 22 7 25 7 39 6,495 . . 3,111 113 Sweden 10 3 33 6 48 17,038 17,963 4,640 4,760 114 Switzerland 16 9 20 12 43 Capital-surplus oil exporters 115 Iraq 28 26 4 42 522 1,442 124 116 Saudi Arabia . 1,726 2,782 . . . 117 Libya . . . 154 593 165 320 118 Kuwait 7 16 77 . 199 . Nonmarket industrial economies i19 Bulgaria 27 16 15 5 37 120 Poland 5 19 31 9 36 121 Hungary 10 10 29 10 41 122 USSR 13 12 27 6 42 123 Czechoslovakia 8 9 34 9 40 124 German Oem, Rep. 19 11 31 9 30 a. Figures in italics are for 1977, not 1978. b. Figures in italics are for 1976, not 1977. 145 Table 7. Commercial Energy Energy Average annual consumption Energy imports growth rate (percent) per capita as a (kilograms percentage of Energy Energy of coal merchandise production consumption equivalent) exports 1960_74a 1974-79 1960-74 1974-79 1960 1979 1960b 1978C Low-income countries 5.2 w 8.4 w 4.4 U) 8.1 w 356 w 463 w 8 a' China and India 4.5 w 8.8 w 4.3 w 8.5 w 439 w 594 w Other low-income 9.5 w 6.8 a' 6.4 w 4.5 w 86 w 129w w 1 Kampuchea, Dem. . . -0.7 -38.9 32 . . 9 2 Lao FOR 16.1 13.7 13.6 17 102 3 Bhutan . . . . . . . 4 Bangladesh 10.1 . . 6.3 . . 41 . . 35 5 Chad . . . . 7.5 4.6 8 24 23 6 Ethiopia 14.1 2.3 14.0 -5.3 9 20 11 20 7 Nepal 26.8 4.6 12.4 2.3 5 14 8 Somalia . . 8.7 13.0 17 78 4 9 Mali . . 8.3 5.6 5.3 15 30 13 10 Burma 5.6 12.4 3.7 5.6 58 72 4 11 Afghanistan 38.8 -2.8 10.1 6.6 24 90 12 12 12 Viet Nam 7.6 11.2 -4.0 99 140 13 Burundi 22.0 . . 6.9 . . 17 14 Upper Volta . . . . 7.7 10.2 5 29 38 15 India 4.9 9.1 5.1 8.3 111 242 11 27 16 Malawi 6.9 5.] 70 22 17 Rwanda . . 3.5 . . 10.4 . . 30 . 18 Sri Lanka 10.1 8.2 3.9 3.8 114 140 8 18 19 Benin . . . . 9.5 -0.6 40 68 16 20 Mozambique 3.2 60.0 5.2 1.1 113 139 11 21 Sierra Leone . . . . 9.0 -1.1 31 89 11 22 China 4.4 8.7 4,1 8.5 650 835 23 Haiti . . 13.7 1.4 20.8 36 66 . . 16 24 Pakistan 9.3 7.5 5,3 5.0 136 218 17 40 25 Tanzania 10.6 10.4 9.4 -2.9 43 53 26 Zaire 3.0 18.1 3.8 0.4 98 103 3 27 Niger . . . . 14.8 12.8 6 48 6 28 Guinea 16.0 (.) 3.2 1.6 67 87 7 29 Central African Rep. 14.1 4.1 7.6 8.5 38 55 12 1 30 Madagascar 6.7 4.1 9.0 3.9 40 94 9 16 31 Uganda 5.2 -4.4 9.1 -8.2 43 39 5 32 Mauritania 21.2 5.5 18 185 39 33 Lesotho . . . . . . . . . . . 34 Togo . . 22.3 12.7 11.8 23 117 10 13 35 Indonesia 8.5 6.5 3.8 10.1 130 237 3 5 36 Sudan 13.7 13.1 -0.9 54 141 8 24 Middle-income countries 12.7w -0.5 w 8.4 w 6.3 w 509w 1,225w 10 iv 20w Oil exporters 15.0w -2.1 w 9.0 w 6.1 w 362 w 893 w 5w lOw Oil importers 6.5w 3.8 w 8.2 w 6.4 w 576 w 1,388 a' 13 w 24 w 37 Kenya 9.6 17.6 3.3 3.5 150 180 18 30 38 Ghana 2.6 12.2 2.3 105 265 7 19 39 Yemen Arab Rep. 12.8 15.8 7 73 40 Senegal 4.7 12.4 110 266 41 Angola 35.5 -2.4 10.3 1.1 90 208 42 Zimbabwe 2.5 -3.1 2.4 -0.3 1,346 791 43 Egypt 9.4 27,1 3.6 10.3 299 565 12 6 44 Yemen, PDR . . . . 7.6 7.0 237 545 45 Liberia 31.8 -1.3 18.9 -0.9 88 448 3 17 46 Zambia . . 5.1 . . 5.2 . . 858 11 47 Honduras 29.4 6.4 7.7 1.5 157 248 10 14 48 Bolivia 17.1 -3.0 6.8 9.3 185 470 4 1 49 Cameroor, 1.1 45.3 6.2 7.8 87 148 7 9 50 Thailand 28.2 0.8 16.2 7.6 63 376 12 28 51 Philippines 2.4 24.9 8.3 5.6 159 356 9 32 52 Congo, Peoples Rep. 15.8 5.1 5.3 7.0 125 213 25 1 53 Nicaragua 26.4 -16.3 10.3 2.7 183 455 12 14 54 Papua New Guinea 12.3 16.2 16.4 4.9 51 299 7 55 El Salvador 5.1 15.6 7.7 8.3 150 351 6 13 56 Nigeria 36.6 1.0 9.4 1.4 29 83 7 2 57 Peru 3.5 18.5 6.5 2.7 436 737 4 20 58 Morocco 2.0 4.7 6.4 6.4 169 315 9 28 59 Mongolia 10.4 14.6 7.3 13.1 553 1,667 . 60 Albania 9.7 5.0 11.3 8.6 327 1,103 . 61 Dominican Rep. 1.8 -5.1 14.4 -1.0 164 515 . . 32 62 Colombia 3.5 2.0 5.7 7.0 510 938 3 7 63 Guatemala 9.9 2,5 6.2 1.6 175 251 12 14 64 Syrian Arab Rep. 86.2 7.5 7.5 15.2 323 971 16 146 Energy Average annual consumption Energy imports growth rate (percent) per capita as a (kilog rams percentage of Energy Energy of coal merchandise production consumption equivalent) exports 1960._74a 1974-79 1960-74 1974-79 1960 1979 1960b 1978C 65 Ivory Coast 9.7 -12.2 14.3 5.5 75 234 5 10 66 Ecuador 19.4 5.0 8.7 14.9 208 654 2 1 67 Paraguay 6.7 8.2 10.7 85 251 68 Tunisia 72.1 5.5 8.7 10.8 173 618 69 Korea, Dem. Rep. 9.4 3.0 9.3 3.6 1,193 2,846 70 Jordan 5.9 13.3 197 552 79 52 71 Lebanon 16. 6. 8.6 -3,7 567 1,083 68 72 Jamaica -0.7 -2.0 11.0 -5.4 446 1,390 11 14 73 Turkey 7.6 3.1 9.8 7.0 254 807 16 63 74 Malaysia 37.3 27.2 10.5 4.1 253 767 2 9 75 Panama 14.7 35.9 9.0 4.3 438 947 91 76 Cuba 21.2 5.6 4.5 6.0 896 1,148 77 Korea, Rep. of 6.3 4.2 13.0 11.4 261 1,642 78 Algeria 11.1 6.5 7:1 12.3 277 671 14 2 79 Mexico 5.8 15.5 7.7 7.8 769 1,673 3 4 80 Chile 3.9 0,1 6.1 0.7 824 1,193 10 18 81 South Africa 3.8 8.1 5.0 4.4 2,320 3,479 9 82 Brazil 8.2 7.5 8.2 7.7 392 1,062 21 39 83 Costa Rica 9.5 3.5 10.1 7.6 315 842 7 13 84 Romania 5.8 3.1 8.2 6.9 1,469 4,810 85 Uruguay 3.7 8.5 2.8 3.4 895 1,274 3 34 86 Iran 14.6 -9.1 15.5 1.4 270 1,214 87 Portugal 4.4 11.7 7.4 6.0 473 1,496 17 88 Argentina 6.5 3.7 5.5 3.1 1,110 2,038 14 17 89 Yugoslavia 4.9 4.1 7.2 5.2 875 2,440 8 25 90 Venezuela 1.1 -3.3 7.0 5.4 1,615 3,055 1 22 91 Trinidad and Tobago 2.8 3.9 10.2 5.8 1,747 5,037 35 39 92 Hong Kong 9.6 16.7 468 2,401 5 6 93 Singapore 13.4 17.1 518 6,211 17 31 94 Greece 14, ê 16. 12.8 9.6 424 2,841 26 42 95 Israel 41,8 -62.3 11.6 4.7 1,270 3,643 17 20 96 Spain 2.6 6.0 8.8 3.8 892 2,822 22 40 Industrial market economies 4.1 w 2.3w 5.3w 2,5w 4,486 w 7,892 w 11w 20w 97 Ireland 0.1 -1.2 4.9 4.3 1,922 3,819 17 13 98 Italy 2.3 0.9 7.8 1.4 1,317 3,438 18 24 99 New Zealand 5.7 5.6 6.0 1.7 2,699 4,891 7 13 100 United Kingdom -1.0 13.5 2.0 1.0 4,489 5,637 14 13 101 Finland 3.3 2.9 8.7 2.4 1,925 6,259 11 20 102 Austria 1.4 0.4 5.0 2.6 2,523 5,206 12 14 103 Japan -1.7 3.4 9.7 3.0 1,333 4,260 18 32 104 Australia 10.9 4,9 5.6 2.8 3,935 6,975 12 9 105 Canada 8.7 1.7 6.2 3.1 7,087 13,453 9 9 106 France -1,3 2.9 5.5 2.3 2,674 4,995 16 21 107 Netherlands 16.1 0.3 9.0 2.7 2,500 6,745 15 16 108 United States 3.5 1.0 4.4 2.3 8,228 12,350 8 31 109 Norway 6.8 22.1 5.8 5.1 4,938 11,919 15 13 110 Belgium -7.2 5,2 4.2 2.0 3,846 6,745 11 13 111 Germany, Fed. Rep. 0.3 4.9 6.0 4.3 2,711 6,627 7 14 112 Denmark -20.4 39.5 8.1 0.8 2,767 5,978 15 20 113 Sweden 3.6 6.0 4.7 2.5 4,599 8,502 16 15 114 Switzerland 4.2 2.7 5.5 1.9 2,762 5,138 10 8 Capital-surplus oil exporters 12.7w 4.0w 7.6 w 10.4 w 771w 1,458w (.) zv 115 Iraq 5.0 9.2 6.0 2.6 494 692 (.) (.) 116 Saudi Arabia 14.0 3.6 9.3 14.3 741 1,554 (.) 117 Libya 29.1 6.9 16.7 27.2 251 2,360 83 (.) 118 Kuwait 4.5 -0.2 4.0 9.2 10,584 6,348 (.) Nonmarket industrial economies 5.3w 4.7w 5.2w 3.9w 2,990w 6,164w 119 Bulgaria 3.3 2.0 9,7 4.1 1,366 5,403 7 120 Poland 3.9 4.2 4.5 2.6 3,115 5,803 121 Hungary 2.6 3,7 4.7 4.8 1,732 4,073 122 USSR 5.9 5.2 5.2 4.4 2,866 6,122 4 123 Czechoslovakia 1.4 -3.3 3.2 -0.4 4,509 6,830 18 124 German Oem. Rep. 0.6 5.3 6.0 4.7 4,579 8,718 a. Figures in italics are for 1961-74, not 1960-74. b. Figures in italics are for 1961, not 1960. c. Figures in italics are for 1977, not 1978. 147 Table 8. Merchandise Trade Average annual growth rat& Merchandise trade (percent) (millions of dollars) Terms of trade Exports Imports (1975 = 100) Exports Imports 197gb 197gb 1960-70 1970-79 1960-70 1970-79 1960 197gb Low-income countries 47,194 I 49699 5.0 m -1.0 in 5.2 11! 3.3 in 113rn 9711! China and India 20985 1 26307 Other low-income 26,209 1 23,392 5.3m -1.1 m 5.4 in 4.2m lllni 99m 1 Kampuchea, Oem. . . . S . . . . 2LaoPDR 35 94 .. 3 Bhutan .. .. .. ., .. 4 Bangladesh 662 1,537 6,5 -4.1 7.0 0.6 201 90 5 Chad . . . . 5.9 -3.4 5.0 -0.1 98 100 6 Ethiopia 418 567 3.6 -2.7 6.2 0.4 143 142 7 Nepal 109 254 . . . . . . . . . . 105 8 Somalia 111 287 2.3 5.6 2.6 7.7 145 97 9 Mali 177 180 3.0 6.7 -0.4 5.5 107 95 10 Burma 363 319 -11.6 -0.3 -5.7 -4.6 115 102 11 Afghanistan 494 686 2.5 3.0 0.7 4.8 82 102 12 Viet Nam . . . . . 13 Burundi 105 152 . . . . . . . . . 14 Upper Volta 81 254 15.9 3.1 8.5 5.2 88 94 15 India 6,998 9,041 3.0 4.6 -0.9 2.3 134 88 16 Malawi 233 399 11.6 4.6 7.6 4.3 115 84 17 Rwanda 115 190 15.8 1.6 8.1 10.5 111 145 18 Sri Lanka 981 1,448 4,7 -3.0 -0.2 -0.6 203 116 19 Benin 190 357 5.0 -11.4 7.4 6.3 114 97 20 Mozambique . . . . 6,0 -16.6 7.9 -14.4 90 75 21 Sierra Leone 205 297 0.3 -6.5 1.9 -3.0 121 108 22 China 13,987 17,266 . . . 23 Haiti 184 221 . . . . . . . . . 24 Pakistan 2,056 4,056 8.2 -0.9 5.3 4.2 102 92 25 Tanzania 523 1,084 3.4 -6.6 6.0 -0.5 98 102 26 Zaire 1,324 597 -1.8 -1.1 5.4 -11.9 122 91 27 Niger . , . . 6.0 11.7 11.9 6.5 98 90 28 Guinea 373 34] . . . . . . . . . 29 Central African Rep. 80 70 8.1 -0.5 4.5 -5.0 109 108 30 Madagascar 394 641 5.3 -1.0 4.1 -1.7 136 105 31 Uganda 427 230 5.0 -7.0 6.2 -10.5 123 136 32 Mauritania 147 259 50.7 -1.1 4.5 5.5 149 78 33 Lesotho .. .. .. .. .. 34 Togo 251 441 10.5 -2.5 8.6 9,8 56 82 35 Indonesia 15,590 7,225 4.0 6.5 2.0 12.8 63 119 36 Sudan 581 1,200 0.1 -4.4 1.2 4.5 83 78 Middle-income countries 272,496 1 304,708 5.4 in 4.3 in 6.6 in 5.0 in 100 in 98 in Oil exporters 94,803 1 77,204 4,5 in 1.7 rn 3.6 in 11.1 in 69 in 113 in Oil importers 177,693 t 227,504 6.3 in 4.4 in 7,7 nI 3.7 in 109 in 94 in 37 Kenya 1,104 1,658 7.2 -0.5 6.6 -1.0 133 110 38 Ghana 1,096 993 0.2 -7.2 -1.5 0,1 111 144 39 Yemen Arab Rep. 14 1,492 . . . . . . . . . 40 Senegal 421 756 1.2 -0.8 2.3 4.5 71 76 41 Angola . . . . 9.0 -7.9 11.5 -4.2 60 113 42 Zimbabwe 1,194 940 . . . . . . . . . 43 Egypt 1,840 3,837 3.2 -2.1 -1.1 11.1 92 75 44 Yemen, PDR 44 434 . . . . . . . . . 45 Liberia 506 487 18.4 2.3 2.9 2.3 255 83 46 Zambia 1.377 755 2.2 -0.7 9.7 -8.1 115 100 47 Honduras 733 830 11.1 4.3 11.6 1.0 119 89 48 Bolivia 777 1.011 9.8 -1.6 8.2 11.8 56 139 49 Cameroon 1,129 1,271 7.1 0.5 9.2 7.0 106 144 50 Thailand 5.288 7,190 5.2 12.0 11.2 5.8 121 73 51 Philippines 4,601 6.613 2.2 6.2 7.1 3.7 112 107 52 Congo, People's Rep. 119 242 5.1 8.2 -1.0 3.3 87 91 53 Nicaragua 774 848 9.7 4.5 10.5 -1.1 112 98 54 Papua New Guinea 964 788 . . S S ' , 55 El Salvador 1,029 1.024 5.4 4.2 6.3 5.6 109 99 56 Nigeria 18,073 12,399 6.6 -0.3 1.6 20.6 32 119 57 Peru 3,474 2,090 2.0 1.7 3.6 1.6 89 97 58 Morocco 1.873 3.678 2.5 1.3 3.4 8.3 75 62 59 Mongolia 281 417 . . . S 60 Albania .. .. .. .. .. .. .. 61 Dominican Rep. 822 1.062 ----2.3 5.6 9.9 3,5 47 40 62 Colombia 4062 3409 2.2 0.9 2.5 5.8 96 118 63 Guatemala 1. 192 1.504 9.1 4.5 7.1 5.9 126 107 64 Syrian Arab Rep. 1 644 3.329 3.4 7,4 4.0 13.9 69 102 148 Average annual growth rated Merchandise trade (percent) (millions of dollars) Terms of trade Exports Imports (1975 = 100) Exports Imports 197gb 197gb 1960-70 1970-79 1960-70 1970-79 1960 1979b 65 Ivory Coast 2,515 2,491 8.8 5.2 9.7 10.1 113 129 66 Ecuador 2,013 1,986 2,9 8,2 11.5 10.5 83 119 67 Paraguay 305 577 5.4 8.4 7,3 8.5 116 101 68 Tunisia 1,766 2,830 4.2 4.8 1.9 11.2 64 81 69 Korea, Dem. Rep. . . 950 . . . . . . . . . 70 Jordan 402 1,949 10.1 19.6. 3.5 15.3 78 63 71 Lebanon 773 2,700 14.2 2.3 5.1 0,5 87 85 72 Jamaica 769 1,010 4.7 -6.8 8.1 -7.0 85 93 73 Turkey 2,261 4,946 . . 1.7 . . 3.3 . . 84 74 Malaysia 11,077 7,849 5.8 6.5 2.3 6.2 150 120 75 Panama 292 1,185 10.5 0.6 10.5 -3.6 117 84 76 Cuba 4,456 4,687 4.0 3.9 5.5 3.4 58 60 77 Korea, Rep. of 15,055 20,339 34.1 25.7 20.5 13.5 99 94 78 Algeria 8,714 8,360 4.5 0.0 -0.9 14.2 39 113 79 Mexico 8,768 11,829 2.8 10.9 6.4 5.0 97 84 80 Chile 3,766 4,219 0.6 10.7 4.7 0.6 126 89 81 South Africa 18,396 8,989 5.4 8.1 8,2 -2.9 108 81 82 Brazil 15,244 19,804 5.1 7.0 4.9 5.6 114 94 83 Costa Rica 923 1,392 9.6 4.4 9.9 4.6 132 103 84 Romania 9,724 10,916 9.4 4.7 8.8 6.1 . . 98 85 Uruguay 788 1,206 2.2 4.3 -2.9 3.1 132 126 86 Iran 19,872 9,738 12.6 -4.6 11.4 14.7 27 118 87 Portugal 3,468 6,086 9,6 -0.3 14.2 3.3 97 95 88 Argentina 7,810 6,713 3.4 10.7 0.3 (.) 109 77 89 Yugoslavia 6,794 14,019 7.7 4.7 8.8 5,0 100 103 90 Venezuela 14,159 9,618 1.6 -10.3 4.2 12.0 36 116 91 Trinidad and Tobago 2,507 2,086 4.9 -2.6 3.2 -5.5 100 101 92 Hong Kong 15,156 17,137 12.7 8.3 9.2 8.4 94 102 93 Singapore 14,233 17,635 4.2 11.0 5,9 8.0 100 101 94 Greece 3,855 9,640 10,8 12.3 10.8 6.0 109 91 95 Israel 4,301 7,333 11.0 9.8 8.7 5.3 109 97 96 Spain 17,903 25,432 11.5 10.8 18.5 3.4 124 100 Industrial market economies 1,028,279 1,106,534 t 8.4 m 5.9 ni 9.3 ni 4.5 in 100 in 98 ni 97 Ireland 7,175 9,858 7.1 8.4 8.3 6.6 96 99 98 Italy 72,242 77,970 13.6 7.3 9.7 3.4 130 99 99 New Zealand 4,694 4,542 4.6 3,4 2.9 1,0 135 124 100 United Kingdom 91,030 102,969 4.8 8.2 5.0 4,4 112. 107 101 Finland 11,175 11,400 6.8 3.9 7.0 1.7 95 89 102 Austria 15,483 20,254 9.6 7.2 9.6 7.2 94 95 103 Japan 103,045 110,670 17.2 9.1 13.7 4.8 150 98 104 Australia 18,473 16,432 6.5 4.2 7.2 3.4 115 90 105 Canada 55,336 52,230 10.0 4.6 9.1 6.7 92 98 106 France 98,059 106,994 8.2 7.1 11.0 6.8 93 101 107 Netherlands 63,667 67,284 9.9 5.7 9.5 4,3 111 99 108 United States 178,578 217,664 6.0 6.9 9.8 5.4 115 91 109 Norway 13,271 13,818 9,1 7.2 9.7 4.5 89 101 110 Belgium 56,258 60,410 10.9 5.2 10.3 5.8 102 97 111 Germany, Fed. Rep. 171,540 157,747 10.1 6.0 10.0 6.0 90 95 112 Denmark 14,506 18,450 7.1 4.4 8.2 3.6 105 96 113 Sweden 27,240 28,488 7.7 2.6 7.2 2.4 97 90 114 Switzerland 26,507 29,354 8.5 4,2 9.0 4.1 85 107 Capital-surplus oil exporters 118,417 t 44,700 8.2 in -2.0 in 10.8 in 18.0 in 26 in 118 in 115 Iraq 21,502 7,028 5.4 2.5 1.4 18.3 25 117 116 Saudi Arabia 63,427 24,254 10.9 5.6 10.9 39.0 27 109 117 Libya 15,236 8,214 67.5 -6.5 15.4 16.8 31 121 118 Kuwait 18,252 5,204 5. 2 -8.5 10.6 17.6 23 118 Nonmarket industrial economies 126,079 t 122,992 t 9,0 in 7.5 in 7.9 in 7.6 In 119 Bulgaria 8,869 8,514 14.4 11.2 12.9 10.3 . 120 Poland 16,249 17,584 -0.3 7.3 -0.4 7,7 . . 103 121 Hungary 7,938 8,674 9.7 8.6 9.1 6,7 83 122 USSR 64,762 57,744 9.7 7.3 7.1 9.6 123 Czechoslovakia 13,198 14,262 6.7 6.6 7.0 6.0 . 124 German Dem. Rep. 15,063 16,214 8.3 7.6 8.6 7.4 . a. See the technical notes, b. Figures in italics are for 1978, not 1979. 149 Table 9. Structure of Merchandise Exports Percentage share of merchandise exports Machinery Fuels, Other and minerals primary Textiles transport Other and metals commodities and clothing equipment manufactures 1960a 1978 1960a 1978 1960a 1978 1960a 1978 1960a 1978 Low-income countries 13 w 32w 69w 38w 13w 12w (.)w 3w 5w 15 w China and India 12w 35w 22w 4w 27w Other low-income 49w 79w 40w 3w 6w (.)w 1w 3w 4w 1 Kampuchea, Dem. 0 0 100 83 0 4 0 1 0 12 2 Lao FOR 18 64 0 1 17 3 Bhutan 4 Bangladesh 1 36 50 1 12 5 Chad 3 0 94 96 0 1 0 0 3 3 6 Ethiopia 0 4 100 95 0 (.) 0 0 0 1 7 Nepal 0 87 6 (.) 7 8 Somalia 0 0 88 99 0 0 8 1 4 0 9 Mali 0 (.) 96 99 1 (.) 1 (.) 2 1 10 Burma 4 11 95 77 0 0 0 1 1 11 11 Afghanistan (.) 17 82 70 14 11 3 0 1 2 12 Viet Nam 6 32 38 (.) 24 13 Burundi . . 8 . . 91 . . 0 0 . . 1 14 Upper Volta 0 (.) 100 95 0 (.) 0 1 (.) 4 15 India 10 10 45 30 35 20 1 6 9 34 16 Malawi (.) 95 3 . . (.) 2 17 Rwanda . . 10 . . 90 . 0 . . 0 . (.) 18 Sri Lanka (.) 11 99 81 0 4 0 (.) 1 4 19 Benin 10 6 80 85 7 2 (.) 0 3 7 20 Mozambique 0 12 100 86 0 2 0 0 0 (.) 21 Sierra Leone 15 8 20 48 0 0 0 0 65 44 22 China . 13 . . 38 . . 24 . 3 . 22 23 Haiti 0 5 100 40 0 18 0 12 0 25 24 Pakistan 0 4 73 38 23 44 1 2 3 12 25 Tanzania (.) 4 87 90 0 1 0 (.) 13 5 26 Zaire 42 71 57 21 0 0 0 1 1 7 27 Niger . 40 100 25 0 1 0 0 0 34 28 Guinea 42 98 58 2 0 0 0 (.) 0 0 29 Central African Rep. 12 (.) 86 62 (.) (.) 1 (.) 1 38 30 Madagascar 4 8 90 85 1 2 1 2 4 3 31 Uganda 8 1 92 99 0 (.) 0 (.) (.) (.) 32 Mauritania 4 87 69 9 1 (.) 20 (.) 6 4 33 Lesotho . 32 . . 31 . . 1 . . 6 . . 30 34 Togo 3 49 89 45 3 3 0 2 5 1 35 Indonesia 33 72 67 26 0 (.) (.) 1 (.) 1 36 Sudan 0 5 100 95 0 (.) 0 (.) 0 (.) Middle-income countries 27w 35w 60w 29w 3w 9w 2w 12w 8w 17w Oil exporters 46w 78w 50w 14w 1w 3w (.)w 2w 3w 3w Oil importers 16w 11w 67w 37w 4w 12w 2w 15w 11w 25 o' 37 Kenya 1 19 87 6] 0 1 0 1 12 12 38 Ghana 7 16 83 80 0 (.) 0 (.) 10 4 39 Yemen Arab Rep. . . (.) . . 90 . . 3 . . 1 . . 6 40 Senegal 3 13 94 80 1 1 1 (.) 1 6 41 Angola . 64 . . 28 . . 0 . . 1 . . 7 42 Zimbabwe 71 25 25 62 1 10 (.) 3 3 0 43 Egypt 4 33 84 38 9 21 (.) 1 3 7 44 Yemen, PDR .. 92 .. 7 .. (.) .. (.) .. 1 45 Liberia 45 62 55 35 0 () 0 1 0 2 46 Zambia 94 . . 2 . . 0 . . 0 . . 4 4] Honduras 5 (.) 93 90 0 1 0 0 2 9 48 Bolivia . . 88 . . 10 . . 1 . . (.) . . 1 49 Cameroon 19 6 7] 90 0 1 2 1 2 2 50 Thailand 7 11 91 64 0 10 0 3 2 12 51 Philippines 10 14 86 52 1 6 0 2 3 26 52 Congo, People's Rep, 7 60 84 24 (.) 0 5 2 4 14 53 Nicaragua 3 1 95 82 0 2 0 1 2 14 54 Papua New Guinea 0 37 92 62 0 0 0 (.) 8 1 55 El Salvador 0 3 94 63 3 12 (.) 3 3 19 56 Nigeria 8 91 89 8 0 0 0 (.) 3 1 5] Peru 49 46 50 43 0 3 0 1 1 7 58 Morocco 38 41 54 36 1 11 1 1 6 11 59 Mongolia 8 81 7 (.) . 4 60 Albania . 49 . . 33 . . 6 . . 1 . . 11 61 Dominican Rep. 6 4 92 75 0 (.) 0 1 2 20 62 Colombia 19 5 79 78 0 5 (.) 2 2 10 63 Guatemala 2 1 95 78 1 5 0 1 2 15 64 Syrian Arab Rep. 0 66 81 26 2 3 0 2 17 3 150 Percentage share of merchandise exports Machinery Fuels, Other and minerals primary Textiles transport Other and metals commodities and clothing equipment manufactures 196O 1978 1960a 1978 1960 1978 196O 1978 1960a 1978 65 Ivory Coast 1 4 98 89 0 2 (.) 2 1 3 66 Ecuador 0 41 99 57 0 1 0 0 1 1 67 Paraguay 0 0 100 89 0 0 0 0 0 11 68 Tunisia 24 44 66 18 1 20 1 3 8 15 69 Korea, Oem. Rep, . . 31 . . 29 . . 5 . . 5 . . 30 70 Jordan 0 32 96 30 0 5 0 2 4 31 71 Lebanon . . 4 . . 32 . . 10 . . 17 . . 37 72 Jamaica 50 22 45 46 2 1 0 1 3 30 73 Turkey 8 6 89 72 0 15 0 1 3 6 74 Malaysia 20 27 74 52 (.) 2 (.) 11 6 8 75 Panama . . 24 . . 64 . . 4 . . 2 . 6 76 Cuba 2 5 93 94 1 0 (.) (.) 4 1 77 Korea, Rep. of 30 1 56 10 8 32 (.) 21 6 36 78 Algeria 12 97 81 2 0 0 1 0 6 1 79 Mexico 24 39 64 31 4 3 1 10 7 17 80 Chile 92 74 4 21 0 (.) 0 (.) 4 5 81 South Africa 29 29 42 29 2 1 4 6 23 35 82 Brazil 8 11 89 55 0 4 (.) 15 3 15 83 Costa Rica 0 (.) 95 71 0 3 0 3 5 23 84 Romania 12 18 10 24 . . 36 85 Uruguay . . 1 71 56 21 20 . . 3 8 20 86 Iran 88 95 9 2 0 2 0 (.) 3 1 87 Portugal 8 4 37 23 18 29 3 14 34 30 88 Argentina 1 2 95 72 0 3 (.) 8 4 15 89 Yugoslavia 18 9 45 19 4 8 15 32 18 32 90 Venezuela 74 97 26 1 0 (.) 0 (.) (.) 2 91 Trinidad and Tobago 82 90 14 3 0 1 0 1 4 5 92 Hong Kong 5 1 15 2 45 46 4 15 31 36 93 Singapore 1 31 73 23 5 5 7 25 14 16 94 Greece 9 18 81 36 1 17 1 3 8 26 95 Israel 4 1 35 17 8 6 2 10 51 66 96 Spain 21 5 57 22 7 6 2 25 13 42 Industrial market economies 11 w 8w 23w 15w 7w 5w 29 w 38w 30w 34 w 97 Ireland 5 3 67 43 6 9 4 14 18 31 98 Italy 8 7 19 8 17 12 29 33 27 40 99 New Zealand (.) 6 97 72 0 3 (.) 7 3 12 100 United Kingdom 7 9 9 10 8 5 44 37 32 39 101 Finland 3 6 50 20 1 6 13 24 33 44 102 Austria 26 5 22 11 10 10 16 28 26 46 103 Japan 11 2 10 2 28 4 23 57 28 35 104 Australia 13 29 79 43 (.) 1 3 5 5 22 105 Canada 33 23 37 23 1 1 8 34 21 19 106 France 9 6 18 18 10 6 25 36 38 34 107 Netherlands 15 19 34 26 8 5 18 18 25 32 108 United States 10 6 27 25 3 2 35 43 25 24 109 Norway 22 34 34 13 2 1 10 30 32 22 110 Belgium 15 9 9 12 12 8 13 24 51 47 111 Germany, Fed. Rep. 9 6 4 6 5 44 47 39 36 112 Denmark 2 4 63 41 3 5 19 25 13 25 113 Sweden 10 6 29 13 1 2 31 43 29 36 114 Switzerland 2 3 8 5 12 7 30 33 48 52 Capital-surplus oil exporters 96w 98w 4w (.)w Ow (.)w Ow 1w Ow 1w 115 Iraq 97 99 3 1 0 (.) 0 (.) 0 (.) 116 Saudi Arabia 95 100 5 0 0 (.) 0 0 0 0 117 Libya 100 100 0 (.) 0 (.) 0 (.) 0 (.) 118 Kuwait 90 1 1 3 .. 5 Nonmarket industrial economies 18w 25w 33w 11w 25w 34w 21w 27w 119 Bulgaria 3 2 75 32 12 4 6 42 4 20 120 Poland 20 . . 11 . 7 41 . 21 121 Hungary 6 8 28 24 7 8 38 35 21 25 122 USSR 24 42 28 9 1 (.) 21 20 26 29 123 Czechoslovakia 20 6 11 6 (.) 5 45 53 25 30 124 German Dem. Rep. 3 3 5 61 28 a. Figures E italics are for 1961, not 1960. 151 Table 10. Structure of Merchandise Imports Percentage share of merchandise imports Machinery Other and primary transport Other Food Fuels commodities equipment manufactures 1960 1978b 1960a 1978b 1960 1978b 1960a 1978b 1960a 1978b Low-income countries 22w 17w 6w 11w 16w 20w 25w 24w 31 w 28 w China and India 17w lOw 32w 18 w 23 w Other low-income w 18 w 6w 12w 6w 6w w 30 w 34w 1 Kampuchea, Dem. 2 Lao PDR 3 Bhutan 4 Bangladesh 21 15 i4 .. 32 5 Chad 19 12 19 46 6 Ethiopia 6 . 12 4 35 43 7 Nepal 13 10 16 20 41 8 Somalia 27 4 0 18 51 9Mali 20 5 4 18 .. 53 10 Burma 14 . 4 9 . . 17 . . 56 11 Afghanistan 14 14 7 8 4 0 14 7 61 71 12 Viet Nam . . . . 0 . . 0 13 Burundi . . 23 . 11 . . 8 . . 27 . . 31 14 Upper Volta 21 19 4 9 1 0 24 43 50 29 15 India 21 16 6 26 28 15 30 19 15 24 16 Malawi 5 . . 12 . . 2 . . 37 . 44 17 Rwanda . . . . . . . . . . . 18 Sri Lanka 39 30 7 16 5 4 15 24 34 26 19 Benin 17 15 10 15 1 2 18 22 54 46 20 Mozambique . . . . . . S 21 Sierra Leone 23 21 12 12 5 1 15 24 45 42 22 China . 17 . 0 43 18 22 23 Haiti . . 28 . . 11 . 4 . . 20 . . 37 24 Pakistan 22 19 10 19 2 7 27 25 39 30 25 Tanzania . S S S S S 26 Zaire . . 17 . . 18 . . . . . 38 . . 27 27 Niger 24 . . 5 4 18 49 28 Guinea .. .. .. .. .. .. .. 29 Central African Rep. 15 17 9 2 2 2 26 38 48 41 30 Madagascar 17 17 6 14 3 3 23 31 51 35 31 Uganda 6 8 8 25 53 32 Mauritania 5 3 3 . . 39 50 33 Lesotho .. .. .. .. .. .. .. 34 Togo 16 8 6 14 3 4 32 37 43 37 35 Indonesia 23 18 5 9 10 6 17 36 45 31 36 Sudan 17 19 8 1 3 2 14 36 58 42 Middle-income countries 15w 12w 9w 17w 13w 8w 28 w 32w 35w 31 w Oil exporters 18w 16w 7w 6w 8w 5w 27 iv 42w 40 iv 31 iv Oil importers 14w 11w lOw 19w 16 w 9w 29 iv 28 iv 31 iv 33 iv 37 Kenya 12 7 11 18 8 3 27 41 42 31 38 Ghana 19 9 5 16 4 5 26 26 46 44 39 Yemen Arab Rep. .. .. .. .. .. .. .. 40 Senegal 30 23 5 12 2 21 19 18 44 26 41 Angola S S S S S S . 42 Zimbabwe . . 2 . . 30 . . 5 . 5 34 . . 29 43 Egypt 23 26 11 2 16 7 25 37 25 28 44 Yemen, PDR .. .. S .. .. .. .. 45 Liberia 16 17 4 18 7 1 34 32 39 32 46 Zambia . . 6 16 . . 3 . . 71 . . 4 47 Honduras 13 9 9 12 3 2 24 31 51 46 48 Bolivia .. .. .. .. .. .. .. .. 49 Cameroon 20 10 8 7 3 2 17 39 52 42 50 Thailand 10 4 11 21 11 9 25 31 43 35 51 Philippines 15 8 10 21 5 7 36 27 34 37 52 Congo, Peoples Rep. 18 21 6 1 1 1 31 32 44 45 53 Nicaragua 9 10 10 15 5 2 22 24 54 49 54 Papua New Guinea 30 . 5 . S 4 . . 23 . . 38 55 El Salvador 17 11 6 8 6 4 26 30 45 47 56 Nigeria 14 14 5 2 6 2 24 44 51 38 57 Peru 16 16 5 19 5 4 37 33 37 28 58 Morocco 27 20 8 15 7 8 19 30 39 27 59 Mongolia . S . . . . . . . S 60 Albania 17 . . 2 . . 3 . . 45 . . 33 61 Dominican Rep. . . 17 22 4 . 23 34 62 Colombia 8 11 3 7 15 7 43 36 31 39 63 Guatemala 12 15 10 16 7 39 26 23 45 7 64 Syrian Arab Rep. 24 12 8 25 5 4 15 22 48 37 152 Percentage share of merchandise imports Machinery Other and primary transport Other Food Fuels commodities equipment manufactures 1960a 1978b 1960a 1978b 1960a 1978b 196O 1978b 196O 1978b 65 Ivory Coast 18 13 6 10 2 2 27 39 47 36 66 Ecuador 13 7 3 1 9 4 33 50 42 38 67 Paraguay 68 Tunisia 2o 9 10 23 31 44 20 69 Korea, Dem. Rep. 70 Jordan 22 10 3 30 35 71 Lebanon 72 Jamaica . . 73 Turkey 7 1 11 32 16 5 42 31 24 31 74 Malaysia 29 17 16 13 13 7 14 34 28 29 75 Panama 15 10 10 24 1 1 22 23 52 42 76 Cuba 77 Korea, Rep. of iô 26 78 Algeria 26 17 4 2 2 3 14 45 54 33 79 Mexico 4 13 2 3 10 7 52 45 32 32 80 Chile 15 . . 16 . . 13 . . 22 . . 34 81 South Africa 6 6 7 1 9 7 37 52 41 34 82 Brazil 14 10 19 33 13 6 36 26 18 25 83 Costa Rica 13 7 6 10 6 3 26 30 49 50 84 Romania 85 Uruguay 5 7 24 32 46 9 17 25 8 27 86 Iran 14 . . 1 . . 1 . . 23 . . 61 87 Portugal 15 16 10 16 28 11 26 28 21 29 88 Argentina 3 6 13 12 11 9 44 39 29 34 89 Yugoslavia 11 7 5 14 25 11 37 37 22 31 90 Venezuela 18 12 1 1 10 4 36 52 35 31 91 Trinidad and Tobago 16 11 34 40 7 2 18 22 25 25 92 Hong Kong 27 15 3 5 16 7 10 19 44 54 93 Singapore 21 10 15 24 38 9 7 29 19 28 94 Greece 11 9 8 19 16 7 44 42 21 23 95 Israel 20 11 7 13 18 7 28 22 27 47 96 Spain 16 16 22 29 25 13 22 19 15 23 Industrial market economies 22 w 13w 11w 19 zv 24 o' 10 w 16 w 25 o' 27 w 33 o' 97 Ireland 18 12 12 10 11 5 21 30 38 43 98 Italy 20 18 14 24 31 14 13 20 22 24 99 New Zealand 8 7. 8 14 16 7 29 31 39 41 100 United Kingdom 36 16 11 12 27 10 8 26 18 36 101 Finland 13 9 10 22 20 8 33 30 24 31 102 Austria 16 8 10 11 20 8 29 31 25 42 103 Japan 17 17 17 40 49 20 9 7 8 16 104 Australia 6 6 10 9 16 5 31 39 37 41 105 Canada 12 8 9 9 12 5 36 50 31 28 106 France 25 14 17 20 25 9 14 23 19 34 107 Netherlands 18 16 13 16 14 6 22 24 33 38 108 United States 24 10 10 24 25 8 10 27 31 31 109 Norway 12 8 9 12 13 6 36 34 30 40 110 Belgium 15 13 10 12 26 9 21 26 28 40 111 Germany, Fed. Rep. 26 15 8 16 28 10 10 21 28 38 112 Denmark 18 12 12 16 11 7 23 27 36 38 113 Sweden 13 9 14 16 13 6 26 30 34 39 114 Switzerland 18 10 8 8 13 6 21 28 40 48 Capital-surplus oil exporters 12 w 1w 2w 42w 43w 115 Iraq 15 3 54 28 116 Saudi Arabia 11 2 43 43 117 Libya 13 17 1 10 2 40 42 32 38 118 Kuwait 12 2 45 40 Nonmarket industrial economies 119 Bulgaria 120 Poland 121 Hungary . è th 34 122 USSR 12 . . 4 18 30 36 . 123 Czechoslovakia 10 20 124 German Oem. Rep. a. Figures in italics are for 1961, not 1960. b. Figures in italics are for 1977, not 1978. 153 Table II. Destination of Merchandise Exports Destination of merchandise exports (percentage of total) Industrial Nonmarket market Developing industrial Capital-surplus economies countries economies oil exporters Origin 1960 1979 1960 1979 1960 1979 1960 1979 Low-income countries 51 w 61 to 29w 29w 19w 5w 1w 5w China and India 39w 52w 25w 33w 36w 9w (.)w 6w Other low-income 63w 69w 33w 26w 3w 2w 1w 3w 1 Kampuchea, Dem. 2 Lao PDR 55 45 3 Bhutan 4 Bangladesh . 55 30 10 5 5 Chad 73 30 27 65 0 0 5 6 Ethiopia 69 72 24 11 6 10 7 Nepal . 60 . 40 8 Somalia 85 18 15 2 (.) (.) 9 Mali 93 68 7 32 0 (.) (.) (.) 10 Burma 23 37 74 61 3 (.) (.) 2 11 Afghanistan 48 48 24 26 28 23 0 3 12 Viet Nam 13 Burundi . 89 10 0 14 Upper Volta 4 75 96 25 0 0 15 India 66 54 25 20 7 14 2 12 16 Malawi 84 16 17 Rwanda 80 20 18 Sri Lanka 75 50 22 35 3 5 19 Benin 90 89 8 10 2 1 0 (.) 20 Mozambique 29 43 71 49 (.) 1 (.) 7 21 Sierra Leone 99 98 1 2 0 0 (.) 22 China 14 51 25 39 61 7 (.) 3 23 Haiti 98 97 2 3 () 0 24 Pakistan 56 47 38 35 4 4 2 14 25 Tanzania 74 57 25 40 1 2 0 1 26 Zaire 27 Niger 89 74 64 97 11 26 36 (.) (.) (.) () 1 0 0 2 28 Guinea 63 69 19 29 18 (.) 2 29 Central African Rep. 83 78 17 22 0 (.) 0 (.) 30 Madagascar 79 67 20 33 1 (.) (.) (.) 31 Uganda 62 67 38 30 0 1 0 2 32 Mauritania 89 88 11 11 0 0 1 33 Lesotho 34 Togo 74 j37 25 n 35 Indonesia 54 76 42 23 11 1 (.) (.) 36 Sudan 59 36 29 45 8 9 4 10 Middle-income countries 68w 67w 24w 26w 8w 4w (.) w 3w Oil exporters 68w 73w 27w 26w 5w 1w (.) w (.) w Oil importers 68w 64w 23w 27w 9w 6w (.) w 3w 37 Kenya 77 63 23 36 0 (.) (.) 1 38 Ghana 88 70 5 17 7 13 (.) (.) 39 Yemen Arab Rep. 46 34 36 46 18 (.) (.) 20 40 Senegal 89 59 11 41 0 (.) 0 (.) 41 Angola 64 33 34 66 2 0 0 1 42 Zimbabwe 43 Egypt 24 33 21 44 Yemen, PDR 42 44 56 49 (.) (.) 2 7 45 Liberia 100 86 (.) 14 0 (.) 0 (.) 46 Zambia 82 . 18 (.) (.) 47 Honduras 77 84 23 16 0 0 (.) 48 Bolivia 88 70 12 30 0 0 49 Cameroon 93 84 6 14 1 2 (.) (.) 50 Thailand 47 58 48 37 2 1 3 4 51 Philippines 94 81 6 16 0 2 (.) 1 52 Congo, People's Rep. 93 72 .7 28 0 (.) 0 (.) 53 Nicaragua 91 65 9 35 (.) (.) 0 (.) 54 Papua New Guinea 90 10 55 El Salvador 88 74 12 26 0 (.) 56 Nigeria 95 87 4 13 () 0 (.) 57 Peru 84 76 16 20 () 4 0 (.) 58 Morocco 74 72 23 20 3 6 (.) 2 59 Mongolia 60 Albania 6 93 0 61 Dominican Rep. 92 7 7 13 0 1 62 Colombia 94 75 5 22 1 3 0 (.) 63 Guatemala 94 70 6 29 0 (.) 0 1 64 Syrian Arab Rep. 39 65 31 20 19 8 11 7 154 Destination of merchandise exports (percentage of total) Industrial Nonmarket market Developing industrial Capital-surplus economies countries economies oil exporters Origin 1960 1979 1960 1979 1960 1979 1960 1979 65 Ivory Coast 84 78 16 17 0 5 0 (.) 66 Ecuador 91 56 8 42 1 2 0 (.) 67 Paraguay 61 64 39 36 0 . . 0 68 Tunisia 76 69 19 27 3 1 2 3 69 Korea, Dem. Rep. . . . . . . . . 70 Jordan 1 15 62 45 11 3 26 37 71 Lebanon 21 11 39 29 8 9 32 51 72 Jamaica 96 78 4 20 0 2 0 (.) 73 Turkey 71 62 17 19 12 11 (.) 8 74 Malaysia 58 62 35 34 7 3 0 1 75 Panama 99 77 1 22 0 (.) 0 1 76Cuba 72 .. 9 .. 19 .. (.) 77 Korea, Rep. of 89 73 11 20 0 (.) 0 7 78 Algeria 93 94 7 5 0 1 (.) (.) 79 Mexico 93 80 7 20 (.) (.) 0 (.) 80 Chile 91 63 9 36 (.) (.) (.) 1 81 South Africa 71 83 28 17 1 (.) (.) 82 Brazil 81 66 13 26 6 6 (.) 2 83 Costa Rica 93 73 7 25 (.) 1 (.) 1 84 Romania 20 31 14 24 66 43 (.) 2 85 Uruguay 82 48 11 47 7 4 0 1 86 Iran 62 64 34 35 3 (.) 1 1 87 Portugal 56 79 42 18 2 2 (.) 1 88 Argentina 75 51 20 42 5 6 (.) 1 89 Yugoslavia 48 38 20 17 31 39 1 6 90 Venezuela 62 62 38 38 0 (.) 0 (.) 91 Trinidad and Tobago 80 78 20 22 0 (.) (.) (.) 92 Hong Kong 54 68 45 29 (.) (.) 1 3 93 Singapore 38 44 57 49 4 2 1 5 94 Greece 65 59 13 21 21 8 1 12 95 Israel 76 79 23 21 1 (.) 0 (.) 96 Spain 80 62 18 30 2 3 (.) 5 Industrial market economies 67w 69w 30w 24w 3w 3w (.)w 4w 97 Ireland 96 89 4 8 (.) 1 (.) 2 98 Italy 65 68 29 22 4 3 2 7 99 New Zealand 95 72 4 21 1 5 (.) 2 100 United Kingdom 57 70 38 23 3 2 2 5 101 Finland 69 72 12 10 19 16 (.) 2 102 Austria 69 70 18 16 13 12 (.) 2 103 Japan 45 46 51 43 2 3 2 8 104 Australia 75 61 21 32 3 4 1 3 105 Canada 90 88 9 9 1 2 (.) 1 106 France 53 67 44 25 3 4 (.) 4 107 Netherlands 78 84 20 12 1 2 1 2 108 United States 61 57 37 36 1 3 1 4 109 Norway 80 84 16 14 4 2 (.) (.) 110 Belgium 79 84 18 12 2 2 1 2 111 Germany, Fed. Rep. 70 73 25 20 4 4 1 3 112 Denmark 83 83 13 13 4 2 (.) 2 113 Sweden 114 Switzerland 79 72 80 69 17 24 12 19 4 4 () 4 3 8 1 4 Capital-surplus oil exporters 83 w 70 w 16w 29w 1w (.)w Ow 1w 115 Iraq 85 55 14 45 1 (.) (.) (.) 116 Saudi Arabia 74 75 26 25 0 (.) 0 (.) 117 Libya 67 80 26 20 7 (.) 0 118 Kuwait 91 65 9 30 0 (.) 0 5 Nonmarket industrial economies 19w 22w 59w (.)w 119 Bulgaria 13 . . 7 80 . . (.) 120 Poland 29 . 17 54 . . (.) 121 Hungary 22 17 . . 61 . (.) 122 USSR 18 31 . . 51 . (.) 123 Czechoslovakia 16 17 67 . . 0 124 German Dem. Rep. 19 . . 13 68 . . (.) 155 Table 12. Trade in Manufactured Goods Destination of manufactured exports (percentage of total) Value of manufactured Industrial Nonmarket Capital- exports market Developing industrial surplus (mu lions economies countries economies oil exporters of dollars) Origin 1962a 1978 1962a 1978 1962a 1978 1962a 1978 1962a 1978b Low-income countries 56 w 45 w 38w 48w 4w 5w 2w 2w China and India 43w 52w 3w .. 2w Other low-income 58w 52w 40w 33w 1w 11w 1w 4w 1 Kampuchea, Dem. 30 21 69 79 1 0 0 0 1 2 2 Lao PDR 35 88 65 12 0 0 0 0 (.) 3 3 Bhutan 0 4 Bangladesh 46 43 8 3 346 5 Chad 19 31 75 69 0 0 6 0 1 3 6 Ethiopia 47 68 51 27 1 1 1 4 2 3 7 Nepal 79 21 0 0 11 8 Somalia 60 77 36 18 0 5 4 0 (.) 1 9 Mali 34 29 66 71 (.) 0 0 0 (.) 2 10 Burma 58 82 42 18 (.) 0 0 0 3 28 11 Afghanistan 96 82 3 10 1 7 0 1 9 43 12 Viet Nam 9 3 91 38 0 58 0 1 1 297 13 Burundi . . 100 . . 0 . . 0 . . 0 . . 1 14 Upper Volta 19 46 81 54 0 0 0 0 1 2 15 India 56 60 37 32 5 4 2 4 630 4006 16 Malawi . . 26 74 . . 0 0 . . 14 17 Rwanda . . 0 . 100 . . 0 . 0 (.) (.) 18 Sri Lanka 63 74 35 20 2 0 (.) 6 6 65 19 Benin 19 26 78 70 3 4 0 0 1 5 20 Mozambique . . 67 . . 27 . . 0 . 6 . . 3 21 Sierra Leone 100 100 0 0 0 0 0 0 23 72 22 China . . 27 70 3 . . (.) . 4,510 23 Haiti 0 0 95 . . 5 . . 0 . . 0 . . 88 24 Pakistan 45 51 52 33 1 6 2 10 97 863 25 Tanzania 85 85 15 15 0 0 (.) 0 20 23 26 Zaire 93 89 7 11 0 0 0 0 12 70 27 Niger 8 89 93 11 0 0 0 0 1 76 28 Guinea . . 27 . . 73 . 0 . . 0 . . 55 29 Central African Rep. 74 89 24 11 2 0 0 0 3 27 30 Madagascar 80 88 20 12 0 0 0 0 5 27 31 Uganda . . 100 . . 0 . . 0 . . 0 . . 2 32 Mauritania 77 84 23 16 0 0 0 0 2 4 33 Lesotho .. .. .. .. .. .. .. 34 logo 44 45 56 50 0 5 0 0 1 21 35 Indonesia 52 47 46 52 1 0 1 1 2 226 36 Sudan 35 90 54 10 0 0 11 0 (.) 4 Middle-income countries 51 w 58 w 44w 33w 4w 5w 1w 4w Oil exporters 71 w 61 w 28w 31w (.) w 6w 1w 2w Oil importers 47 w 58 w 47w 33w 4w 5w 1w 4w 37 Kenya . S 9 . . 90 . . 0 . . 1 12 155 38 Ghana 38 56 50 44 11 0 1 0 12 40 39 Yemen Arab Rep. . . . . . . . . . . . . . . 1 40 Senegal 76 50 24 50 0 0 0 0 5 28 41 Angola 80 20 . . 0 . . (0) 60 42 Zimbabwe . . . . . . . . . . . S . . 16 43 Egypt 21 . . 14 . . 55 . . 10 88 504 44 Yemen, PDR . . 64 . . 36 . . 0 . . 0 . . 2 45 Liberia 100 45 0 55 0 0 0 0 3 9 46 Zambia . . 67 . . 33 . . 0 . . 0 . . 35 47 Honduras 3 30 97 70 0 0 0 0 2 58 48 Bolivia 82 . . 18 . . 0 . . C . . 4 22 49 Cameroon 25 64 75 36 0 0 0 0 4 31 50 Thailand. 51 62 49 33 (.) 0 (.) 5 21 1039 51 Philippines 91 78 9 20 0 (.) (.) 2 26 1,136 52 Congo, People's Rep. 85 62 15 38 0 0 0 (.) 14 42 53 Nicaragua 1 99. . . 0 0 . . 142 54 Papua New Guinea . . 100 . . 0 . . 0 . . 0 2 16 55 El Salvador 1 5 99 95 0 0 0 0 18 217 56 Nigeria 91 88 9 12 0 0 0 (.) 34 162 57 Peru 53 42 47 56 0 2 0 (.) 5 205 58 Morocco 49 73 49 20 2 2 (.) 5 28 345 59 Mongolia (.) . . 46 54 . . 0 33 60 Albania 33 . . 67 . . 0 . . 0 . . 44 61 Dominican Rep. 93 . . 7 . . 0 . . 0 127 62 Colombia 57 43 43 56 0 1 0 (.) 16 430 63 Guatemala O 0 6 . . 94 0 . . 0 . . 230 64 Syrian Arab Rep. 11 33 33 . . 23 21 89 156 Destination of manufactured exports (percentage of total) Value of manufactured Industrial Nonmarket Capital- exports market Developing industrial surplus (millions economies countries economies oil exporters of dollars) Origin 1962a 1978 1962a 1978 1962a 1978 1962a 1978 1962a 1978b 65 Ivory Coast 58 33 42 67 0 0 0 0 2 155 66 Ecuador 46 21 54 79 0 0 0 0 2 27 67 Paraguay 83 46 17 54 0 0 0 0 4 29 68 Tunisia 59 77 33 15 0 1 8 7 10 429 69 Korea, Dem. Rep. . . 5 41 . . 45 . . 9 . . 242 70 Jordan . . 15 26 . . 0 . . 59 1 134 71 Lebanon 9 . . 32 . . (.) . . 59 8 402 72 Jamaica 72 80 28 18 0 2 0 0 20 475 73 Turkey 73 70 10 15 1] 4 (.) 11 4 501 74 Malaysia 11 55 89 44 0 (.) (.) 1 58 1,714 75 Panama 24 17 76 83 0 0 0 0 1 30 76 Cuba . . 39 . 49 . 12 . . 0 . . 39 77 Korea, Rep. of 83 74 17 17 0 0 (.) 9 10 11,220 78 Algeria . . 68 . . 22 . . 6 . . 4 . . 35 79 Mexico 71 69 29 31 0 (.) 0 (.) 122 1,620 80 Chile 44 38 56 62 0 0 0 (.) 20 118 81 South Africa . . 67 . . 29 . . 0 . 4 318 2,576 82 Brazil 54 50 44 47 2 1 0 2 39 4,335 83 Costa Rica 27 73 . . 0 0 . . 263 84 Romania 36 52 . . 11 . . 1 . . 5,712 85 Uruguay . . 65 . . 34 . . 1 . . (.) . . 290 86 Iran 64 82 28 7 1 6 7 5 33 597 87 Portugal 53 80 46 18 (.) 2 1 (.) 205 1,157 88 Argentina 61 40 36 56 3 4 (.) (.) 39 1,674 89 Yugoslavia 31 28 40 19 28 46 1 7 344 4,054 90 Venezuela 93 55 7 45 0 0 0 0 158 144 91 Trinidad and Tobago 34 64 66 36 0 0 0 0 13 147 92 Hong Kong 62 71 37 26 0 (.) 1 3 642 10,693 93 Singapore 5 48 95 48 0 (.) (.) 4 328 4,679 94 Greece 52 61 41 18 4 3 3 18 27 1,543 95 Israel 66 61 32 39 2 0 0 0 184 3,195 96 Spain 57 59 41 34 1 2 1 5 205 9,620 Industrial market economIes 62w 64w 33w 28w 3w 3w 2w 5w 97 Ireland 76 90 24 8 0 1 (.) 1 134 3,093 98 Italy 64 65 29 24 5 4 2 7 3,490 47,493 99 New Zealand 90 67 10 32 0 0 0 1 23 850 100 United Kingdom 57 63 38 28 3 2 2 7 8,947 57,872 101 Finland 55 63 13 11 31 24 1 2 608 6,413 102 Austria 65 66 17 16 16 16 1 2 931 10,238 103 Japan 44 45 50 45 4 3 2 7 4,340 93,954 104 Australia 61 29 39 70 (.) (.) (.) 1 263 4,198 105 Canada 89 89 11 9 (.) 1 (.) 1 1,959 23,922 106 France 58 63 38 29 4 4 (.) 4 5,317 58,238 107 Netherlands 76 78 20 16 2 2 2 4 2,443 27,434 108 United States 47 55 51 39 (.) 1 2 5 13,957 99,083 109 Norway 79 74 19 21 2 4 (.) 1 442 5,346 110 Belgium 82 82 15 13 2 2 1 3 3,257 35,498 111 Germany, Fed. Rep. 73 69 23 22 3 5 1 4 11,623 125,246 112 Denmark 75 77 17 17 7 3 1 3 627 6,417 113 Sweden 76 75 19 18 5 4 (.) 3 1,958 17,590 114 Switzerland 72 66 25 26 2 4 1 4 2,005 21,653 Capital-surplus oil exporters 20w 72w 1w 7w 115 Iraq (.) 18 21 82 (.) 0 79 0 5 53 116 Saudi Arabia . . 16 . . 73 . . 1 . . 10 . . 237 117 Libya 68 46 32 54 - 0 (.) 0 0 (.) 40 118 Kuwait . . . . . 0 959 Nonmarket industrial economies 13u' 36w 49w 2w 119 Bulgaria 5 35 0 57 . . 3 . . 4,926 120 Poland . 19 38 . . 42 . . 1 9,836 121 Hungary 20 42 . . 34 . . 4 . . 4,329 122 USSR 25,456 123 Czechoslovakia 13 17 . . 68 . . 2 . . 10,296 124 German Dem, Rep. 9 49 . . 41 . . 1 . . 11,412 a. Figures in itaHcs are for 1963, not 1962. b. Figures n itahcs are for 1977, not 1978 157 Table 13. Balance of Payments and Debt Service Ratios Current account balance before Interest Debt service as percentage of: interest payments payments on on external public external public Exports of debt debt goods and (millions of dollars) (millions of dollars) GNP services 1970 1979a 1970 1979 1970 1979a 1970 1979a Low-income countries 1.1 w 1.8w 12.6w 10.8w China and India Other low-income 1.4w 2:8w 9.1 w 10.8w 1 Kampuchea, Dem. . . . . . . . . . 0 2LaoPDR .. .. .. .. 3 Bhutan . . . . . . . . . 4 Bangladesh -60 -1,269 . . 41 . . 0.9 . . 8.4 5 Chad 2 -72 (.) 4 1.0 3.3 3.9 14.4 6 Ethiopia -26 -79 6 13 1.2 0.7 11.4 4.9 7 Nepal . . -7 (.) 2 0.3 0.2 . 1.4 -5 . 8 Somalia -205 (.) 1 0.3 0.2 2.1 1.1 9 Mali -2 -64 (.) 3 0.2 0.7 1.2 8.5 10 Burma -61 -328 3 31 0.9 1.8 15.8 22.0 11 Afghanistan . . 9 4 2,5 1.4 S 12 Viet Nam .. .. .. .. .. 13 Burundi 2 -38 (.) 1 0.3 0.4 2.3 3.1 14 Upper Volta 9 -68 (.) 4 0.6 0.8 4.0 3.8 15 India -205 1,395 189 375 0.9 0.8 20.9 9.5 16 Malawi -32 -185 3 16 1.8 2.1 7.0 9.4 17 Rwanda 6 44 (.) 1 0.2 0.1 1.4 0.6 18 Sri Lanka -47 -203 12 28 2.0 2.3 10.3 6.5 19 Benin -1 -87 (.) 3 0.7 1.4 2.2 5.1 20 Mozambique . . . . . . . . 0 0 21 Sierra Leone -14 -109 2 12 2.9 8.6 10.1 22.2 22 China .. .. .. .. .. 23 Haiti 2 -57 (.) 3 1.0 0.7 5.8 2.9 24 Pakistan -591 -984 76 213 1.9 2.3 23.6 12.0 25 Tanzania -29 -457 6 23 1.2 0.9 8.2 7.4 26 Zaire -55 -463 9 95 2.0 2.3 4.4 9.1 27 Niger 1 -96 1 7 0.6 0.8 3.8 3.6 28 Guinea . . . . 4 24 2.4 5.7 26.7 22.2 29 Central African Rep. -11 -9 (.) (.) 1.1 (.) 3.3 0.1 30 Madagascar 12 -425 2 8 0.8 0.7 3.5 3.9 31 Uganda 24 32 4 5 0.6 0.3 3.4 7.4 32 Mauritania -5 -70 (.) 16 2.0 13.6 3.2 32.4 33 Lesotho . . -22 (.) 1 0.5 0.3 . . 0.6 34 Togo 4 -219 1 16 0.9 6.9 3.0 24.4 35 Indonesia -286 1,711 24 772 0.9 4.5 6.9 13.4 36 Sudan -29 -151 13 86 1.3 4.5 10.7 33.0 Middle-income countries 1,5w 3.2 w 9.0w 14.2w Oil exporters 2.0 w 5.3 w 11.2w 20.1w Oil importers 1.3w 2.4 w 8.1 w 11.5 aj 37 Kenya -38 -419 11 60 1.7 1.8 7.9 7.5 38 Ghana -56 282 12 26 1.1 0.5 5.2 4.2 39 Yemen Arab Rep. . . -118 . . 6 0.2 1.2 . . 1.8 40 Senegal -14 -394 2 43 0.8 5.0 2.7 13.7 41 Angola . . . . , . . 42 Zimbabwe -13 -61 . . . . . . . . . 43 Egypt -116 -1,316 38 237 4.1 5.5 28.7 15.8 44 Yemen, PDR -4 -31 . . 2 . . 1.3 2.8 45 Liberia . . -91 6 22 5.5 8.1 . . 13.8 46 Zambia 131 264 23 93 3.2 9.7 5.8 19.7 47 Honduras -61 -154 3 45 0.8 5.3 2.8 12.7 48 Bolivia -16 -350 6 116 2.2 5.4 10.9 29.6 49 Cameroon -26 -290 4 65 0.8 2.5 3.2 9.5 50 Thaland -234 -1,945 16 146 0.6 1.0 3.3 4.2 51 Philippines -23 -1,266 25 298 1.4 2.7 7.5 12.6 52 Congo, People's Rep. . . -144 3- 38 3.4 10.1 . . 7.3 53 Nicaragua -32 202 7 41 3.2 3.2 11.1 8.1 54 Papua New Guinea . . 87 1 26 0.1 2.3 . . 4.3 55 El Salvador 12 1,128 4 22 0.9 1.0 3.6 3.2 56 Nigeria -348 1,429 20 205 0.7 0.4 4.2 1.5 57 Peru 284 1,055 44 437 2.1 6.6 11.6 22.3 58 Morocco -101 -1,110 23 411 1.5 5.2 7.7 21.8 59 Mongolia 60 Albania 61 Dominican Rep. -287 4 0.e H 13.9 62 Colombia -249 759 44 231 1.7 2.4 11.6 12.5 63 Guatemala -2 -187 6 19 1.4 0.5 7.4 2.2 64 Syrian Arab Rep. -63 173 6 86 2.1 3.8 11.0 16.5 158 Current account balance before Interest Debt service as percentage of: interest payments payments on on external public external public Exports of debt debt goods and (millions of dollars) (millions of dollars) GNP services 1970 1979a 1970 1979 1970 1979 1970 1979a 65 Ivory Coast -26 -560 11 225 2.8 6.0 6.8 15.2 66 Ecuador -106 -424 7 161 1.5 7.4 9.1 29.6 67 Paraguay -13 -239 4 22 1.8 1.5 11.8 8.5 68 Tunisia -35 -134 18 163 4.5 4.8 18.5 11.8 69 Korea, Dem. Rep. . . . S ' . . . . . 70 Jordan -15 31 2 39 0,7 3.5 3.6 5.3 71 Lebanon . . . . 1 4 0.2 . . . 72 Jamaica -145 -47 8 95 1.1 8.7 2.5 15.9 73 Turkey -28 -752 42 253 1.3 1.1 16.3 12.9 74 Malaysia 29 1,564 21 189 1.7 2.9 3.6 4.7 75 Panama -57 -113 7 202 3.0 15.7 7.7 18.8 76Cuba .. .. .. .. .. 77 Korea, Rep. of -553 -3216 70 937 3.1 4.4 19.4 13.5 78 Algeria -116 -568 10 1,162 0.8 8.6 3.2 25.6 79 Mexico -844 -1,672 216 2,874 2.1 8.8 24.1 64.1 80 Chile -13 -522 78 354 3.1 6.2 18.9 26.2 81 South Africa -1,156 4,447 59 890 1.2 4.1 5.1 10.6 82 Brazil -704 -7,600 133 2,865 0.9 3.1 12.4 346 83 Costa Rica -67 -498 7 80 2.9 6.6 9.9 23.1 84 Romania . . . . . . . 85 Uruguay -29 -248 16 69 2.6 1.8 25.2 9.9 86 Iran -422 3,084 85 394 3.0 . . 12.2 87 Portugal 98 373 28 235 1.3 1.9 4.4 5.3 88 Argentina -37 158 121 584 1.9 1.5 21.5 15.5 89 Yugoslavia -276 -3,442 72 219 1.7 0.8 8.3 4.2 90 Venezuela -64 366 40 655 0.7 3.2 2.9 9.4 91 Trinidad and Tobago -74 327 6 39 1.9 1.2 4.4 2.3 92 Hong Kong . . -810 . . 11 (.) 0.1 . 93 Singapore -566 -1,091 6 86 0.6 2.5 0.6 1.3 94 Greece -364 -1,591 41 301 1.0 1.9 7.1 8.4 95 Israel -600 -1093 13 379 0.7 4.7 2.6 10.3 96 Spain 151 2,309 72 853 0.5 0.9 3.6 5.6 Industrial market economlesb 97 Ireland -189 -1,283 98 Italy 902 5,110 99 New Zealand -29 -545 100 United Kingdom 1,881 -3,814 101 Finland -239 -284 102 Austria -23 -1,782 103 Japan 1,980 -8,695 104 Australia -832 -1,932 105 Canada 1,078 -4,358 106 France 72 1,535 107 Netherlands -520 -2,348 108 United States 2,357 -685 109 Norway -242 -1156 110 Belgium 715 -3,810 111 Germany, Fed. Rep. 850 -6,357 112 Denmark -544 -2,983 113 Sweden -266 -2,619 114 Switzerland 70 2,434 Capital-surplus oil exporters 115 Iraq 110 3,250 9 37 0.9 1.0 2.2 116 Saudi Arabia 71 10857 117 Libya 645 7364 . . . . 118 Kuwait 14,219 . . . . . . Nonmarket industrial economiesb 119 Bulgaria 120 Poland 121 Hungary 122 USSR 123 Czechoslovakia 124 German Dem. Rep. a. Figures in italics are for 1978, not 1979. b. See the technical notes. 159 Table 14. Flow of External Capital Public and publicly guaranteed medium- and long-term loans Net direct (millions of dollars) private investment Repayment (millions Gross inflow of principal Net inflow of dollars) 1970 1979 1970 1979 1970 1979 1970 1979a Low-income countries China and India Other low-income 1 Kampuchea, Dem. . 2LaoPDR 3 Bhutan 0 4 Bangladesh 543 . 43 500 5Chad 6 27 2 15 4 12 31 6 Ethiopia 7 Nepal 27 1 122 41 15 2 13 2 112 109 39 4 8 Somalia 9 Mali 10 Burma 21 16 4 87 79 409 (.) (.) 18 60 1 6 221 4 86 73 349 . 5 5 (.) 11 Afghanistan 31 41 15 5 16 36 . . 12 Viet Nam . . . . . S 13 Burundi 1 38 (.) 2 1 36 14 Upper Volta 2 68 2 4 (.) 64 1 15 India 890 1:164 307 588 583 576 6 16 Malawi 38 138 3 11 35 127 9 13 17 Rwanda (.) 42 (.) 1 (.) 41 (.) 13 18 Sri Lanka 61 187 27 48 34 139 (.) 47 19 Benin 2 51 1 10 1 41 7 20 Mozambique 21 Sierra Leone 22 China .. 8 96 .. 10 .. . 42 .. . 2 .. 54 . . 8 11 23 Haiti 4 42 4 5 (.) 37 3 15 24 Pakistan 484 882 114 272 370 610 31 61 25 Tanzania 50 215 10 17 40 198 26 Zaire 31 216 28 73 3 143 42 30 27 Niger 12 85 1 7 11 78 1 12 28 Guinea 90 131 10 59 80 72 . 29 Central African Rep. 30 Madagascar 31 Uganda 2 10 26 12 81 35 2 5 4 (.) 22 10 (.) 22 5 12 71 13 10 1 4 7 22 2 32 Mauritania 4 79 3 51 1 28 1 84 33 Lesotho (.) 19 (.) 1 (.) 18 34 Togo 5 290 2 52 3 238 1 35 Indonesia 441 1,945 59 1,335 382 610 83 226 36 Sudan 54 384 22 191 32 193 Middle-income countries Oil exporters Oil importers 37 Kenya 38 Ghana 39 Yemen Arab Rep. 30 40 . . 370 143 141 15 12 . . 44 23 25 15 28 . . 326 120 116 14 . 8 . 1 5 65 40 Senegal 15 219 5 79 10 140 5 45 41 Angola . . . . . . 42 Zimbabwe . . . . . . . . . . . . . 43 Egypt 302 2,293 247 804 55 1,489 . . 1,211 44 Yemen, PDR 45 Liberia 46 Zambia 7 351 1 102 173 369 . 12 32 . 54 208 10 5319 1 92 119 161 . . 47 Honduras 29 211 3 63 26 148 8 10 48 Bolivia 54 330 17 142 37 188 76 18 49 Cameroon 28 506 4 62 24 444 16 54 50 Thailand 55 1,124 23 132 32 992 43 52 51 Philippines 132 1,677 73 506 59 1,171 29 75 52 Congo, People's Rep. 35 101 6 68 29 33 . 0 4 53 Nicaragua 44 112 17 14 2] 98 15 3 54 Papua New Guinea 25 53 (.) 20 25 33 . . 41 55 El Salvador 8 77 6 13 2 64 4 23 56 Nigeria 62 1,583 36 60 26 1,523 205 304 57 Peru 148 1,113 101 482 47 631 70 70 58 Morocco 163 1,434 36 388 127 1,046 20 39 59 Mongolia . 0 60 Albania . . . 13 . 0 . . . . . . . 61 Dominican Rep. 36 228 7 105 29 123 72 62 Colombia 235 1,036 75 433 160 603 39 124 63 Guatemala 3] 129 20 14 17 115 29 117 64 Syrian Arab Rep. 59 571 30 264 29 307 52 160 Public and publicly guaranteed medium- and long-term loans Net direct (millions of dollars) private investment Repayment (millions Gross inflow of principal Net inflow of dollars) 1970 1979a 1970 1979 1970 j979a 1970 1979a 65 Ivory Coast 77 967 27 307 50 660 31 36 66 Ecuador 42 1148 16 553 26 595 89 50 67 Paraguay 15 82 7 29 8 53 4 53 68 Tunisia 89 765 45 174 44 591 16 49 69 Korea, Dem. Rep. . . . . S . 70 Jordan 14 249 3 56 11 193 26 71 Lebanon 12 51 2 6 10 45 . 72 Jamaica 15 227 6 113 9 114 161 -26 73 Turkey 328 4,150 128 387 200 3,763 58 129 74 Malaysia 43 793 45 386 -2 407 94 873 75 Panama 67 407 24 192 43 215 33 40 76 Cuba .. .. .. .. .. 77 Korea, Rep. of 440 4648 198 1,699 242 2,949 66 17 78 Algeria 292 4,172 33 1,525 259 2,647 45 72 79 Mexico 772 10,667 476 7,484 296 3183 323 668 80 Chile 397 1,315 163 904 234 411 -79 233 81 South Africa 519 2,129 146 1,266 373 863 145 -359 82 Brazil 882 8,760 254 3,387 628 5,373 407 2,220 83 Costa Rica 30 501 21 175 9 326 26 46 84 Romania . . . . . . . . . . . 85 Uruguay 3] 173 47 54 -10 119 . . 216 86 Iran 940 1,752 235 663 705 1,089 25 87 Portugal 21 1,014 62 175 -41 839 50 59 88 Argentina 487 3,018 342 902 145 2,116 11 234 89 Yugoslavia 180 526 168 344 12 182 . 90 Venezuela 224 3,836 42 890 182 2.946 -23 81 91 Trinidad and Tobago 8 20 10 10 -2 10 83 130 92 Hong Kong (.) 180 (.) 11 (.) 169 . 93 Singapore 58 353 6 133 52 220 93 815 94 Greece 164 798 61 440 103 358 50 19 95 Israel 410 1,199 25 477 385 722 40 9 96 Spain 268 1,788 122 850 146 938 179 623 Industrial market economiesb 97 Ireland 32 381 98 Italy 496 -182 99 New Zealand 22 26 100 United Kingdom -440 -3,091 101 Finland -34 -98 102 Austria 84 107 103 Japan -261 -2,662 104 Australia 787 1,092 105 Canada 566 -373 106 France 248 508 107 Netherlands -14 -1,092 108 United States -6,130 -14,638 109 Norway 32 399 110 Belgium 162 -278 111 Germany, Fed. Rep. -290 -3,527 112 Denmark 75 103 113 Sweden -105 -526 114 Switzerland Capital-surplus oil exporters 115 Iraq 63 308 18 195 45 113 24 116 Saudi Arabia 20 -1,173 117 Libya . . . . . . . . 139 -319 118 Kuwait . . . S S . . . . . . 145 Nonmarket industrial economiesb 119 Bulgaria 120 Poland 121 Hungary 122 USSR 123 CzechoslovakFa 124 German Dam. Rep. a. Figures in italics are for 1978, not 1979. b. See the technical notes. 161 Table 15. External Public Debt and International Reserves External public debt outstanding and disbursed Gross international reserves As percentage In months Millions of dollars of GNP Millions of dollars of import coverage 1970 1979 1970 1979a 1970 1979a 1979a Low-income countries 22.2 w 29.5 w 4.2 w China and India Other low-income 17.9w 21.3w 2.8 w 1 Kampuchea, Oem. 2 Lao FOR 3 Bhutan 4 Bangladesh . 2,842 . . 29.6 . . 412 5 Chad 32 172 11.8 30.8 2 17 0.5 6 Ethiopia 169 620 9.5 15.7 72 321 5.4 7 Nepal 3 125 0.3 6.9 95 241 8.9 8 Somalia 77 546 24.4 40.4 21 54 1.4 9 Mali 238 545 88.1 44.2 1 17 0.5 10 Burma 101 1141 4.7 23.2 98 331 4,8 11 Afghanistan 454 1,143 48.2 29.1 50 933 12 Viet Nam . . . . . . . . . . . 13 Burundi 7 103 3.1 12.9 15 95 5.7 14 Upper Volta 21 256 6.4 25.4 36 67 2.0 15 India 7,935 15641 14.8 12,3 1,023 11,816 10.2 16 Malawi 121 423 38.7 33.1 29 75 1.7 17 Rwanda 2 124 0.9 13.0 8 153 5.8 18 Sri Lanka 317 1086 16.1 32.4 43 547 4.1 19 Benin 41 186 16.0 19.2 16 20 20 Mozambique . . . . . . . 21 Sierra Leone 59 289 14.3 33.4 39 47 1.3 22 China .. .. .. .. 23 Haiti 40 209 10.3 18.0 4 66 2.3 24 Pakistan 3059 7,998 30.5 38.5 194 1,120 2.5 25 Tanzania 248 1,153 19.4 25.3 65 69 0.9 26 Zaire 311 3780 17.1 51.8 189 335 1,4 27 Niger 32 234 8.7 14.4 19 137 28 Guinea 314 990 51.7 68.6 13 35 1.0 29 Central African Rep. 19 150 11.2 24.0 1 49 2.7 30 Madagascar 93 348 10.8 12.6 37 5 0.1 31 Uganda 128 245 9.8 2.6 57 . 32 Mauritania 27 590 16.8 120.9 3 118 3.6 33 Lesotho 8 52 9.2 11.1 . . . 34 Togo 40 851 16.0 85.9 35 71 2.0 35 Indonesia 2443 13,326 27.1 28.3 160 4,205 3.4 36 Sudan 309 2,114 11.6 34.5 22 67 0.7 Middle-income countries 10.4w 17.4w 5.2 w Oil exporters 10.9w 24.5w 4.9 w Oil importers 10.2w 14.8w 5.4 w 37 Kenya 313 1,427 20.3 24.3 220 669 3.7 38 Ghana 489 977 22.6 9.6 58 404 4.8 39 Yemen Arab Rep. . . 466 . . 11.9 . . 1,433 10.3 40 Senegal 98 786 11.6 32.3 22 35 41 Angola 42 Zmbabwe . . . . . . . . . . . 43 Egypt 1,644 11,409 23.8 60.4 165 1,794 2.6 44 Yemen, PDR 1 441 . . 49.0 60 230 5,7 45 Liberia 158 454 49.6 48.4 . . 55 46 Zambia 596 1,559 34.5 505 515 193 1.8 47 Honduras 90 746 12.8 36.3 20 215 2.4 48 Bolivia 477 1,835 46.4 38.7 46 526 4.5 49 Cameroon 131 1,634 12.1 32.9 81 141 0.5 50 Thailand 322 2,699 4.9 9.9 911 3,102 4.2 51 Philippines 633 5,180 9.2 17.3 255 3,120 4.6 52 Congo, People's Rep. 143 799 54.5 75.8 9 47 0.2 53 Nicaragua 155 1101 20.6 62.9 50 58 0.9 54, Fapua New Guinea 36 393 6.2 19.5 . . 555 5.8 55 El Salvador 88 397 8.6 11.5 63 401 3.5 56 Ngeria 478 3,744 6.4 5.0 223 5,870 4.5 57 Peru 856 5,931 12.7 42.9 338 2,114 7.0 58 Morocco 711 6,227 18.6 40.3 141 916 2.1 59 Mongolia . . . 60 Albania . . . . . . . . . , . . . 61 Dominican Rep. 212 828 14.6 16.2 32 295 2.2 62 Colombia 1,249 3,426 18.1 12.6 207 5,032 12.7 63 Guatemala 106 482 5.7 7.0 80 963 6.1 64 Syrian Arab Rep. 232 2283 13.6 24.9 57 1,006 3.2 162 External public debt outstanding and disbursed Gross international reserves As percentage In months Millions of dollars of GNP Millions of dollars of import coverage 1970 1979a 1970 1979a 1970 1979a 1979a 65 Ivory Coast 256 3,647 18.3 40.3 119 168 1.6 66 Ecuador 213 2,207 13.3 22.8 85 932 3,7 67 Paraguay 112 491 19.1 14.4 18 629 8.8 68 Tunisia 545 3,057 38.5 43.5 60 667 2,5 69 Korea, Dem. Rep. . . . . . . . . 70 Jordan 118 1,047 . . 38.1 258 1,586 7,7 71 Lebanon 64 93 4.2 . . 405 6,253 72 Jamaica 154 1,182 11.5 49.4 139 68 0.6 73 Turkey 1,854 10,972 14.4 19.0 440 2697 5.3 74 Malaysia 390 3,004 10.0 15.4 667 5,006 5.6 75 Panama 194 2,106 19.0 83.9 16 119 0.6 76 Cuba .. .. .. .. 77 Korea, Rep. of 1,797 14,694 20.9 24.5 610 3,112 1.5 78 Algeria 937 15,330 18.5 49.1 352 5505 5,4 79 Mexico 3,206 28,805 9.7 24.5 756 3406 1.7 80 Chile 2,066 4,767 26.4 23.6 392 2,716 5,7 81 South Africa 1,089 7,399 6.3 13.9 1,057 5569 3,9 82 Brazil 3227 35092 7.2 17.7 1,190 9,837 4.1 83 Costa Rica 134 1,277 13.8 33.0 16 165 1.2 84 Romania . . . . . . . . . . 2338 85 Uruguay 267 914 11.0 13.3 186 2331 17.8 86 Iran 2,193 7,372 20.8 . . 217 17,205 87 Portugal 471 3,708 7.0 16.8 1,565 12,262 19.2 88 Argentina 1,878 8,716 7.6 8.6 682 11,625 13.4 89 Yugoslavia 1,198 3,700 8.5 5.2 144 2,137 90 Venezuela 728 9,797 6.6 20.0 1,047 13,152 9,7 91 Trinidad and Tobago 101 422 12.5 10.5 43 2,164 14.6 92 Hong Kong 2 405 0.1 2.2 . . . 93 Singapore 152 1,323 7.9 14.8 1,012 5,819 4.1 94 Greece 905 3,531 8.9 8.9 318 2,902 3.2 95 Israel 2,274 9,954 41.3 55.1 451 3,694 3.7 96 Spain 1,209 8,656 3.3 4.4 1851 20,705 8.2 Industrial market economiesb 5.0 w 97 Ireland 698 2,408 2.7 98 Italy 5547 52,353 7.0 99 New Zealand 258 476 1.0 100 United Kingdom 2,918 29,087 2.7 101 Finland 456 2,047 1.8 102 Austria 1,806 15,395 6.8 103 Japan 4,876 31,927 2.9 104 Australia 1,709 5484 2.8 105 Canada 4,732 14220 2.4 106 France 5,199 59523 5.5 107 Netherlands 3,362 30,104 4.4 108 United States 15,237 143,259 6.1 109 Norway 813 4,820 2.6 110 Belgium 2,947 22,930 3,7 111 Germany, Fed. Rep. 13,879 101,316 5.9 112 Denmark 488 4,075 2.0 113 Sweden 775 6,412 2.2 114 Switzerland 5,317 59,074 19.9 Capital-surplus oil exporters 6.9 zt' 115 Iraq 274 878 8.8 3.9 472 116 Saudi Arabia 670 21,614 117 Libya , . 1,596 7,604 11.0 118 Kuwait 209 4,171 6.5 Nonmarket industrial economiesb 119 Bulgaria 120 Poland 121 Hungary 122 USSR 123 Czechoslovakia 124 German Dem, Rep. a. Figures in italics are for 1978, not 1979. b. See the technical notes. 163 Table 16. Official Development Assistance from OECD and OPEC Members Amount 1960 1965 1970 1975 1976 1977 1978 1979 1980a OECD Millions of US dollars 98 Italy 77 60 147 182 226 186 375 279 600 99 New Zealand . . 14 66 53 52 55 62 63 100 United Kingdom 407 472 500 910 885 1120 1,456 2,067 1,766 101 Finland 2 7 48 51 49 55 86 106 102 Austria . 10 11 79 48 108 166 127 174 103 Japan 105 244 458 1,148 1,105 1,424 2,215 2,638 3,300 104 Australia 59 119 212 552 377 400 588 620 653 105 Canada 75 96 337 848 763 945 1,060 1,042 1,035 106 France 823 752 971 2,093 2,146 2,267 2,705 3,358 4,041 107 Netherlands 35 70 196 608 728 908 1,074 1,404 1,577 108 United States 2,702 4,023 3,153 4,161 4360 4,682 5,664 4,567 7,091 109 Norway 5 11 37 184 218 295 355 428 472 110 Belgium 101 102 120 378 340 371 536 631 575 111 Germany, Fed. Rep. 223 456 599 1689 1,592 1,717 2,347 3,350 3,512 112 Denmark 5 13 59 205 214 258 388 448 464 113 Sweden 7 38 117 566 608 779 783 956 928 114 Switzerland 4 12 30 104 112 119 173 205 246 Total 4,628 6,478 6,967 13,820 13,829 15,680 19,994 22,267 26,603 OECD As percentage of donor GNP 98 Italy .22 .10 .16 .11 .13 .10 .14 .09 .15 99 New Zealand . . . . .23 .52 .41 .39 .34 .30 .27 100 United Kingdom .56 .47 .41 .39 .40 .46 .48 .52 34 101 Finland .02 .06 .18 .17 .16 .17 .21 .22 102 Austria . . .11 .07 .21 .12 .22 .29 .19 .22 103 Japan .24 .27 .23 .23 .20 .21 .23 .26 .32 104 Australia .37 .53 .59 .59 .41 .42 .54 .52 47 105 Canada .19 .19 .41 .52 .39 .48 .52 .47 .42 106 France 1,35 .76 .66 .62 .62 .60 .57 .59 .62 107 Netherlands .31 .36 .61 .75 .83 .86 .82 .93 .99 108 United States .53 .58 .32 .27 .26 .25 .27 .19 .27 109 Norway .11 .16 .32 .66 .70 .83 .90 .93 .82 110 Belgium .88 .60 .46 .59 .51 .46 .55 .56 .48 111 Germany, Fed. Rep. .31 .40 .32 .40 .36 .33 .37 .44 .43 112 Denmark .09 .13 .38 .58 .56 .60 .75 .75 .72 113 Sweden .05 .19 .38 .82 .82 .99 .90 .94 .76 114 Switzerland .04 .09 .15 .19 .19 .19 .20 .21 .24 OECD National currencies 98 Italy (billions of lire) 48 38 92 119 188 148 318 233 505 99 New Zealand (millions of dollars) . . . . 13 55 53 54 53 61 64 100 United Kingdom (millions of pounds) 145 168 208 411 490 642 759 974 762 101 Finland (millions of markkaa) 6 29 177 195 196 226 335 392 102 Austria (millions of schillings) 260 286 1376 861 1,785 2,411 1,698 2,214 103 Japan (billions of yen) 38 88 165 341 328 383 466 578 767 104 Australia (millions of dollars) 53 106 189 422 308 361 514 555 575 105 Canada (millions of dollars) 73 104 353 863 752 1,005 1,209 1,221 1,203 106 France (millions of francs) 4,063 3,713 5,393 8,975 10,255 11,762 12,207 14,287 16,797 107 Netherlands (millions of gullders) 133 253 710 1538 1,925 2,229 2,323 2,817 3,086 108 United States (millions of dollars) 2,702 4023 3,153 4,161 4,360 4,682 5,664 4,567 7,091 109 Norway (millions of kroner) 36 78 264 962 1,190 1,570 1,861 2,167 2,313 110 Belgium (millions of francs) 5,050 5,100 6,000 13,903 13,129 13,234 16,836 18,500 16,511 111 Germany, Fed. Rep. (millions of deutsche marks) 937 1,824 2,192 4,156 4,009 3,987 4,715 6,140 6,276 112 Denmark (millions of kroner) 35 90 443 1,178 1,294 1,549 2,140 2,357 2,575 113 Sweden (millions of kronor) 36 196 605 2,350 2,647 3,504 3,538 4,098 3,897 114 Switzerland (millions of francs) 17 52 131 260 281 284 309 341 408 OECD Summary ODA (billions of US dollars, nominal prices) 4.6 6.5 7.0 13.8 13.8 15.7 20.0 22.3 26.6 ODA as percentage of GNP .51 .49 .34 .36 .33 .33 .35 .34 .37 ODA (billions of US dollars, constant 1978 prices) 13.1 16.7 14.9 17.9 17.3 18.0 20.0 20.3 22.2 GNP (trillions of US dollars, nominal prices) .9 1.3 2.0 3.8 4.2 4.7 5.6 6.5 7.1 ODAdefiatorc .35 .39 .47 .77 .80 .87 1.00 1.10 1.20 164 Amount 1981 1982a 1983a 1984a 1985a 1975 1976 1977 1978 1979 1980d OPEC Millions of US dollars 821 1020 1248 1515 1749 54 Nigeria 14 83 64 38 31 42 71 76 81 86 91 78 Algeria 41 54 47 44 272 83 2777 2689 2,971 3,199 3,440 86 Iran 593 752 221 278 21 29 150 194 245 321 402 90 Venezuela 31 103 52 109 82 130 208 252 292 336 385 115 Iraq 218 232 61 172 868 854 3,595 4,107 4,807 5,437 6323 116 Saudi Arabia 1,997 2,407 2,409 1,470 2,298 3,033 798 897 1,002 1,116 1,240 117 Libya 261 94 115 169 108 281 1213 1,400 1,564 1,741 1,934 118 Kuwait 976 616 1,517 1,268 1,053 1186 4,490 4,968 5,500 6,157 6,861 United Arab 1,808 2,060 2,280 2,463 2,730 Emirates 1,046 1,059 1,175 684 1,113d 1,062 7,295 7,885 8,437 8,588 9,070 Qatar 339 195 197 106 277 299 561 669 777 889 993 1010 1,142 1,264 Total OAPECe 4,878 4,65] 5,521 3,913 5,989 6,798 729 888 3,726 4163 4,595 5,043 5,504 Total OPEC 5,516 5,595 5,858 4,338 6,123 6999 548 598 667 731 810 OPEC As percentage of donor GNP 1,214 1,431 1,599 1,779 1,970 260 357 422 480 544 54 Nigeria .04 .19 .13 .06 .04 .05 30,264 33,654 37,497 41,023 45,310 78 Algeria .28 .33 .24 .18 .87 .21 86 Iran 1.12 1.16 .29 .37 .03 .03 90 Venezuela .11 .33 .14 .27 .17 .23 115 Iraq 1.64 1.44 .33 .76 2.60 2.19 .18 .20 .22 .24 .25 116 Saudi Arabia 5.62 5.13 4.09 2.27 3.01 2.60 .26 .25 .24 .23 .22 117 Libya 2.30 .63 .65 .99 .46 .92 .48 .42 .42 .41 .40 118 Kuwait 8.11 4.52 10.02 7.36 4.08 3.87 .26 .30 .34 .40 .45 United Arab .25 .27 .28 .29 .30 Emirates 11.68 9.21 8.05 4.82 6.1] 3.96 .31 .31 .32 .32 .33 Qatar 15.62 7.95 7.90 3.56 5.89 4.50 ' ' ' ' Total OAPECe 4.99 3.83 3.75 2.39 2.80 2.34 .62 .62 :62 :63 .64 Total OPEC 2.59 2.14 1.91 1.29 1.49 1.36 1.02 1.04 1.03 1.00 1.00 .26 .25 .24 .22 .21 .90 .95 .98 1.00 1.00 .55 .60 .61 .62 .62 .43 .44 .45 .45 ..45 74 .73 .73 .72 .72 .90 .95 .95 .95 .95 .25 .31 .33 .34 .35 Net bilateral flow to low-income countries 696 864 1,058 1,284 1482 1960 1965 1970 1975 1976 1977 1978 1979 73 78 83 88 93 1,172 1,135 1,254 1.350 1,452 OECD As percentage of donor GNP 550 898 1,176 1,473 .......14 711 2,638 3,196 3,703 4,261 4.883 98 Italy .03 .04 .06 .01 .01 .02 .01 .01 99 New Zealand .06 .04 .03 .02 807 922 1,079 1,221 1.420 100 United Kingdom .22 .23 .15 .11 .14 .11 .15 .16 690 775 866 964 1,072 101 Finland 06 .07 .06 .04 .06 1,406 1,623 1.813 2.018 2,242 102 Austria .02 . . .06 .05 .02 .01 .01 .02 18,634 20,618 22826 25553 28.475 3,525 4,016 4,445 4,802 5,322 103 Japan .12 .13 .11 .08 .08 .06 .07 .11 104 Australia . . .08 .09 .10 .07 .07 .08 .09 7,295 7,885 8,437 8,588 9,070 105 Canada .11 .10 .22 .24 .14 .13 .17 .13 2,730 3,256 3,782 4.327 4,833 106 France .01 .12 .09 .10 .10 .07 .08 .08 20,875 25,428 28,921 32. 701 36,195 107 Netherlands .19 .08 .24 .24 .26 .33 .34 .30 6670 7.453 8,225 9,027 9,853 108 United States .22 .26 .14 .08 .05 .03 .04 .03 3,034 3,311 3.693 4.047 4,484 109 Norway .02 .04 .12 .25 .22 .30 .39 .34 110 Belgium .27 .56 .30 .31 .26 .24 .23 .28 5,069 5,975 6,676 7,428 8.226 111 Germany, Fed. Rep. .13 .14 .10 .12 .07 .10 .10 .09 429 589 697 793 898 112 Denmark . . .02 .10 .20 .21 .24 .21 .26 113 Sweden .01 .07 .12 .41 .40 .44 .37 .40 114 Switzerland . . .02 .05 .10 .07 .05 .08 .06 Total .18 .20 .13 .11 .09 .07 .09 .09 30.3 33.7 37.5 41.0 453b .38 .38 .38 .38 370 23.1 23.7 24.5 24.9 25.7 a. Estimated. b. These figures are based on exchange rates of Ocobe 98O. f the exchange rates of May 1981 had been usec, the figure for ODA fl '985 woud be $39.8 7.9 8.8 9.8 10.9 12.1 bii.ion. that for ODA as a oercentage of GNP .36 pecent c. See he techn Ca notes, 1.31 1.42 1.53 1.65 1.76 d. Prov'sionaL e. Oganzation of Arab Petroleum Export.ng Countr es. 165 Table 17. Population Growth, Past and Projected, and Hypothetical Stationary Populationa Average annual growth of Projected Hypothetical Assu med population population size of year of Year (percent) (millions) stationary reaching net of reaching population reproduction stationary 1960-70 1970-79 1980 2000 (millions) rate of 1 population Low-income countries 2.2w 2.1w 2,300 t 3,275 1 China and India 2.1w 1.9w 1,6501 2,2141 Other low-income 2.4w 2.6w 650 I 1,061 1 Kampuchea, Oem. 2.7 2 Lao PDR 2.2 1. 11 2035 2130 3 Bhutan 2.0 2.1 1 2 4 2035 2130 4 Bangladesh 2.4 3.0 92 148 338 2035 2105 5 Chad 1.8 2.0 4 7 19 2045 2140 6 Ethiopia 2.4 2.1 31 53 162 2045 2140 7 Nepal 2.0 2.2 14 21 44 2035 2130 8 Somalia 2.4 2.3 4 6 17 2040 2130 9 Mali 2.4 2.6 7 12 35 2040 2130 10 Burma 2.2 2.2 34 50 90 2020 2110 11 Afghanistan 2.3 2.6 16 25 59 2040 2135 12 Viet Nam 3.1 2.9 54 88 153 2015 2075 13 Burundi 1.6 2.0 4 7 17 2040 2135 14 Upper Volta 1.6 1.6 6 10 28 2040 2130 15 India 2.3 2,1 673 975 1,621 2020 2115 16 Malawi 2.8 2.8 6 11 36 2040 2110 17 Rwanda 2.8 2.8 5 9 29 2040 2110 18 Sri Lanka 2.4 1.7 15 21 31 2010 2065 19 Benin 2.6 2.9 4 6 19 2040 2110 20 Mozambique 2.2 2.5 10 20 51 2040 2130 21 Sierra Leone 2.2 2.5 3 6 17 2040 2130 22 China 1.9 1.9 977 1,239 1,564 2005 2070 23 Haiti 1.5 1.7 5 8 17 2030 2090 24 Pakistan 2.8 3.1 82 141 340 2035 2100 25 Tanzania 2.7 3.4 19 35 97 2035 2100 26 Zaire 2.0 2.7 28 49 139 2040 2130 27 Niger 3.3 2.8 5 10 29 2040 2130 28 Guinea 2.8 2.9 5 9 23 2040 2130 29 Central African Rep. 2.2 2.2 2 3 9 2040 2130 30 Madagascar 2.1 2.5 9 15 45 2040 2110 31 Uganda 3.7 3.0 13 24 67 2035 2100 32 Mauritania 2.5 2.7 2 3 9 2045 2135 33 Lesotbo 2.0 2.3 1 2 5 2035 2105 34 Togo 2.7 2.4 2 4 13 2040 2110 35 Indonesia 2.0 2.3 146 220 388 2020 2110 36 Sudan 2.2 2.6 18 31 86 2040 2105 Middle-income countries 2.5w 2,4w 1,008 1 1,569 Oil exporters 2.7w 2.7w 3341 5651 Oil importers 2.3w 2.2w 6741 10041 37 Kenya 3.2 3.4 16 34 109 2035 2095 38 Ghana 2.4 3.0 12 21 52 2035 2100 39 Yemen Arab Rep. 1.8 1.8 6 9 22 2040 2130 40 Senegal 2.4 2.6 6 10 30 2045 2135 41 Angola 1.5 2.3 7 12 35 2045 2135 42 Zimbabwe 3.9 3.3 7 15 42 2035 2095 43 Egypt 2.2 2.0 40 60 104 2020 2080 44 Yemen, PDR 1.9 2.3 2 3 8 2040 2110 45 Liberia 3.1 3.3 2 4 11 2035 2095 46 Zambia 2.8 3.0 6 11 31 2035 2125 47 Honduras 3.1 3.3 4 7 16 2030 2090 48 Bolivia 2.3 2.5 6 9 20 2035 2095 49 Cameroon 1.8 2.2 8 14 37 2040 2130 50 Thailand 2.9 2.4 46 68 103 2005 2070 51 Philippines 3.0 2.6 48 75 125 2015 2075 52 Congo, People's Rep. 2.1 2.5 2. 3 7 2040 2130 53 Nicaragua 2.9 3.3 3 5 11 2030 2090 54 Papua New Guinea 2.1 2.3 3 4 9 2035 2125' 55 El Salvador 2.9 2.9 5 8 15 2020 2080 56 Nigeria 2.5 2.5 85 161 459 2035 2105 57 Peru 2.8 2.7 18 28 55 2025 2085 58 Morocco 2.5 2.9 20 36 81 2030 2090 59 Mongolia 2.9 2.9 2 3 5 2020 2080 60 Albania 2.8 2.5 3 4 6 2005 2060 61 Dominican Rep. 2.9 2.9 5 9 16 2015 2075 62 Colombia 3.0 2.3 27 40 61 2010 2070 63 Guatemala 2.8 2.9 7 12 23 2025 2085 64 Syrian Arab Rep. 3.2 3.6 9 16 33 2020 2080 166 Average annual growth of Projected Hypothetical Assumed population population size of year of Year (percent) (millions) stationary reaching net of reaching population reproduction stationary 1960-70 1970-79 1980 2000 (millions) rate of 1 population 65 Ivory Coast 3.7 5.5 9 15 45 2040 2110 66 Ecuador 3.1 3.3 8 14 28 2025 2085 67 Paraguay 2.6 2.9 3 5 9 2020 2080 68 Tunisia 1.9 2.1 6 9 16 2020 2070 69 Korea, Dem. Rep. 2.8 2.5 18 28 47 2020 2085 70 Jordan 3.0 3.4 3 6 13 2025 2085 71 Lebanon 2.8 0.8 3 4 6 2010 2070 72 Jamaica 1.4 1.6 2 3 5 2005 2065 73 Turkey 2.5 2.5 45 69 114 2015 2075 74 Malaysia 2.9 2.2 13 20 30 2010 2120 75 Panama 2.9 2.3 2 3 4 2010 2070 76 Cuba 2.0 1.4 10 13 15 2000 2045 77 Korea, Rep. of 2.4 1.9 38 53 72 2005 2065 78 Algeria 2.8 3.3 19 34 79 2030 2090 79 Mexico 3.2 2.9 67 109 188 2015 2075 80 Chile 2.1 1.7 11 15 19 2005 2070 81 South Africa 2.6 2.7 29 50 107 2025 2090 82 Brazil 2.9 2.2 119 177 281 2015 2075 83 Costa Rica 3.4 2.5 2 3 5 2005 2065 84 Romania 1.0 0.9 22 26 29 2000 2075 85 Uruguay 1.1 0.3 3 4 4 2010 2075 86 Iran 2.7 2.9 38 64 140 2030 2090 87 Portugal -0.2 1.4 10 11 14 2000 2070 88 Argentina 1.4 1.6 28 34 43 2010 2075 89 Yugoslavia 1.0 0.9 22 26 29 2005 2065 90 Venezuela 3,4 3.3 15 24 41 2015 2075 91 Trinidad and Tobago 2.0 1.3 1 2 2 2000 2065 92 Hong Kong 2.5 2.6 5 6 8 2000 2035 93 Singapore 2.4 1.4 2 3 4 2000 2035 94 Greece 0.5 0.6 9 10 11 2000 2065 95 Israel 3.4 2.7 4 5 7 2010 2080 96 Spain 1.1 1.0 37 43 50 2000 2065 Industrial market economies 1.0w 0.7 w 675 t 744 97 Ireland 0.4 1.1 3 4 5 2000 2060 98 Italy 0.6 0.6 57 61 63 2000 2030 99 New Zealand 1.7 .1.5 3 4 5 2000 2070 100 United Kingdom 0.5 0.1 56 58 60 2000 2025 101 Finland 0.4 0.5 5 5 5 2000 2020 102 Austria 0.6 0.1 7 8 8 2000 2025 103 Japan 1.0 1.1 117 130 133 2000 2015 104 Australia 2.0 1.5 14 17 19 2000 2075 105 Canada 1.8 1.1 24 28 31 2000 2030 106 France 1.0 0.6 54 58 61 2000 2030 107 Netherlands 1.3 0.8 14 16 16 2000 2025 108 United States 1.3 1.0 22] 259 283 2000 2030 109 Norway 0.8 0.5 4 4 5 2000 2030 110 Belgium 0.5 0.2 10 10 10 2000 2025 111 Germany, Fed. Rep. 0.9 0.1 61 62 62 2000 2000 112 Denmark 0.7 0.4 5 5 5 2000 2020 113 Sweden 0.7 0.3 8 8 8 2000 2000 114 Switzerland 1.6 0.3 6 7 7 2000 2005 Capital-surplus oil exporters 3.6 w 4.0 w 26 t 45 115 Iraq 3.1 3.3 13 23 52 2030 2090 116 Saudi Arabia 3.4 4.5 9 15 37 2035 2095 117 Libya 3.8 4.1 3 5 12 2030 2090 118 Kuwait 9.8 6.0 1 . 2 5 2030 2085 Nonmarket industrial economies 1.1 iv 0.8w 355t 410t 119 Bulgaria 0.8 0.6 9 10 10 2000 2055 120 Poland 1.0 0.9 36 41 47 2000 2060 121 Hungary 0.4 0.4 11 11 12 2000 2030 122 USSR 1.3 0.9 267 314 356 2000 2060 123 Czechoslovakia 0.5 0.7 15 17 19 2000 2085 124 German Dem. Rep. -0.1 -0.1 1] 17 18 2000 2015 Totalb 4,364 6043 a. For the assumptions used in the projections, see the technical notes. b. Excludes countries with populations of less than one million. 167 Table 18. Demographic and Fertility-related Indicators Percentage Crude Crude Percentage of married birth death change in: Percentage women rate per rate per of women in using thousand thousand Crude Crude Total reproductive contra- population population birth death fertility age group ceptivesa rate rate rate (aged 15-44) 1960 1979 1960 1979 1960-79 1960-79 1979 1979 1970 1978 Low-income countries 40w 29w 18w 11w -27.5w -38.2w 4.5w 46 w China and India 38 w 24 w 16 w 9w -35.7 w -40.8 w 4.0 w 47w Other low-income 47 w 42w 24w 16w -11.6w -35.0w 5.7w 42 w 1 Kampuchea, Dem. 49 . . 22 . . . . . 2 Lao PDR 44 42 23 21 -3.4 -6.7 6.2 40 3 Bhutan 46 41 28 20 -9.4 -29.3 6.0 43 4 Bangladesh 49 44 23 16 -11.6 -30.2 5.7 44 5 Chad 45 44 29 24 -2.4 -18.4 5.9 42 6 Ethiopia 51 50 28 24 -1.8 -13.2 6.7 42 3 Nepal 46 42 29 20 -8.3 -29.7 6.2 41 8 Somalia 49 46 29 20 -5.9 -30.0 6.1 41 9 Mali 50 49 27 22 -0.8 -18.9 6.7 41 10 Burma 43 37 22 14 -13.1 -38.5 5.3 42 11 Afghanistan 50 47 30 23 -6.4 -23.6 6.7 42 12 Viet Nam 47 36 21 9 -21.8 -58.2 5.3 42 13 Burundi 47 45 27 22 -3.2 -15.8 5.9 43 14 Upper Volta 49 48 27 21 -1.4 -19.2 6.5 41 . 15 India 44 34 23 14 -23.1 -40.5 4.8 45 12 23 16 Malawi 53 51 27 19 -3.6 -31.0 7.0 40 17 Rwanda 51 50 27 19 -2.9 -30.5 6.9 40 , 18 Sri Lanka 36 28 9 7 -22.3 -18.7 3.8 47 8 41 19 Benin 51 49 27 19 -3.6 -30.2 6.7 41 20 Mozambique 46 45 26 18 -2.4 -29.5 6.1 41 21 Sierra Leone 47 46 27 19 -2.8 -30.5 6.1 41 22 Chinab 34 18 11 6 -47.4 -42.6 2.7 49 23 Haiti 45 41 19 14 -8.7 -27.5 5.7 42 , , 5 24 Pakistan 48 44 23 14 -8.3 -36.7 6.5 42 4 6 25 Tanzania 47 46 22 15 -0.6 -31.5 6.5 40 . 26 Zaire 48 46 24 18 -4.6 -25.2 6.1 42 (.) 27 Niger 52 52 27 22 -0.6 -18.1 7.1 41 28 Guinea 47 46 30 20 -1.9 -32.8 6.2 42 29 Central African Rep. 43 44 28 21 3.0 -23.8 5.9 41 30 Madagascar 47 46 27 18 -1.9 -31.6 6.5 41 31 Uganda 45 45 20 14 -0.4 -32.0 6.1 41 32 Mauritania 51 50 27 22 -0,8 -19,4 6.9 41 33 Lesotho 40 40 23 16 -1.7 -30.7 5.4 42 34 Togo 51 48 27 18 -5.3 -30.9 6.5 41 35 Indonesia 47 36' 25 13 -22.5 -46.4 4.8 43 (.) , 36 Sudan 45 46 25 18 0.9 -26.2 6.6 42 Middle-income countries 41 w 34 w 15w lOw -16.9w-32.]w 4.8 w 43w Oil exporters 47 w 41 w 19w 12w -12.6w -35.8w 5.8 w 42w Oil importers 38 w 31 w 14w 9w -20.0w -31.3w 4.4 w 43 rv 37 Kenya 52 51 24 13 -1.3 -42.7 7.8 37 1 38 Ghana 49 48 24 17 -1.4 -30.0 6.7 41 2 4 39 Yemen Arab Rep. 50 47 29 23 -5.0 -19.5 6.5 41 40 Senegal 48 48 26 21 0.2 -18.0 6.5 41 41 Angola 50 48 31 22 -4.0 -27.5 6.4 42 , , 42 Zimbabwe 47 47 19 13 0.6 -30.9 6.6 40 . . 14 43 Egypt 44 37 19 12 -14.7 -35.1 4.9 44 9 17 44 Yemen, PDR 50 46 29 20 -7.9 -30.1 6.8 41 45 Liberia 50 48 21 14 -4.2 -33.0 6.9 40 46 Zambia 51 49 24 17 -2.8 -31.4 6.9 40 , , 47 Honduras 51 46 19 11 -10.6 -39.5 6.8 40 48 Bolivia 46 43 22 16 -6.7 -25.5 6.2 42 49 Cameroon 43 42 27 19 -1.2 -30.2 5.7 41 50 Thailand 44 31 16 8 -29.8 -50.0 4.3 44 e 51 Philippines 46 34 16 8 -24.7 -47.4 4.8 45 8 37 52 Congo, People's Rep. 46 45 27 18 -2.2 -29.8 6.0 41 . . 53 Nicaragua 51 45 19 12 -10,3 -37.4 6.3 41 19 54 Papua New Guinea 44 37 23 15 -15.5 -32.5 5.3 42 3 55 El Salvador 48 39 17 9 -19.1 -48.2 5.8 41 . . 34 56 Nigeria 52 50 25 17 -4.2 -31.6 6.9 41 57 Peru 46 38 20 11 -18.5 -43.7 5.3 43 . . 58 Morocco 50 44 21 13 -12.0 -38.5 6.6 41 1 5 59 Mongolia 41 36 15 8 -12.4 -46.9 5.2 42 60 Albania 41 30 11 6 -26.8 -44.0 3.9 45 . . . 61 Dominican Rep. 50 36 16 9 -27.9 -45.6 4.8 43 . . 31 62 Colombia 46 30 14 8 -33.8 -41.0 3.9 45 46 63 Guatemala 48 40 18 11 -16.8 -41.8 5.5 43 . . . 64 Syrian Arab Rep. 47 45 18 8 -4.7 -52.0 7.0 40 . . (.) 168 Percentage Crude Crude Percentage of married birth death change in: Percentage women rate per rate per of women in using thousand thousand Crude Crude Total reproductive contra- population population birth death fertility age group ceptivesa rate rate rate (aged 15-44) 1960 1979 1960 1979 1960-79 1960-79 1979 1979 1970 1978 65 Ivory Coast 50 47 26 18 -6.4 -32.0 6,7 41 66 Ecuador 47 40 14 10 -13.3 -29.9 6.1 42 . . 6 67 Paraguay 43 38 13 8 -11.0 -36.3 5.5 42 . . 16 68 Tunisia 47 31 19 11 -33.5 -43.4 4.4 43 10 21 69 Korea, Dem. Rep. 41 32 13 8 20.6 -37.8 4.4 44 70 Jordan 47 45 20 10 -5.5 -50.3 7.0 40 71 Lebanon 43 30 14 8 -30.3 -40.4 4.1 43 14 72 Jamaica 39 29 9 7 -27.8 -30.9 3.9 41 . . 40 73 Turkey 43 34 16 10 -19.5 -37.4 4.8 43 3 38 74 Malaysia 39 28 9 6 -27.6 -37.4 3.8 45 7 36 75 Panama 41 31 10 6 -24.4 -42.0 4.0 44 . . 47 76 Cuba 32 18 9 6 -45.1 -29.7 2.2 47 . 77 Korea, Rep. of 43 25 14 8 -39.9 -41.5 3.3 48 32 49 78 Algeria 51 46 20 14 -9.1 -32.8 7.0 40 79 Mexico 45 36 12 7 -20.0 -36.0 5.0 41 . . 40 80 Chile 37 23 12 7 -36.3 -42.3 2.8 47 81 South Africa 39 38 15 10 -2.6 -33.1 5.1 42 82 Brazil 43 29 13 9 -27.1 -32.6 4.1 45 2 83 Costa Rica 47 29 10 5 -38.1 -46.4 3.5 47 . . 64 84 Romania 20 18 9 10 -5.7 5.6 2.5 40 85 Uruguay 22 20 9 10 -9.5 4.3 2.8 40 . 86 Iran 47 43 21 13 -8.1 -36.4 6.1 42 3 23 8] Portugal 24 18 8 10 -24.5 28.0 2.4 42 88 Argentina 24 21 9 8 -11.5 -9.3 2.8 43 89 Yugoslavia 23 18 10 9 -24.6 -13.3 2.2 44 59 90 Venezuela 45 35 10 6 -22.1 -37.3 4.7 44 91 Trinidad and Tobago 38 22 8 6 -40.3 -30.5 2.6 48 44 92 Hong Kong 35 19 7 5 -44.2 -28.8 2.3 48 50 79 93 Singapore 38 18 8 5 -50.3 -33.8 2.1 54 45 71 94 Greece 19 16 8 10 -16.1 30.3 2.3 40 95 Israel 27 26 6 7 -2.3 18.0 3.4 42 96 Spain 21 18 9 9 -17.3 -4.4 2.6 41 . Industrial market economies 20 w 15w lOw lOw -27.5w -2.2 w 1.9 w 43w 97 Ireland 22 21 12 10 -1.9 -16.8 3.3 40 98 Italy 18 14 10 10 -27.0 3.1 2.0 41 99 New Zealand 26 18 9 8 -31.0 -12.2 2.2 45 100 United Kingdom 17 12 12 12 -29.1 0.8 1.8 40 72 101 Finland 19 14 9 10 -26.6 3.3 1.7 44 77 102 Austria 18 12 13 13 -32.0 0.8 1.7 40 . 103 Japan 18 15 8 7 -17.6 -12.0 1.8 45 56 61 104 Australia 22 17 9 8 -24.8 -9.2 2.1 45 66 105 Canada 2] 1] 8 7 -36.9 -8.9 1.9 48 . 106 France 18 14 12 11 -23.1 -5.3 1.9 41 64 79 107 Netherlands 21 13 8 9 -38.9 13.0 1.6 45 59 75 108 United States 24 17 9 9 -29.8 -3.2 1.9 45 65 68 109 Norway 18 13 9 11 -24.9 16.3 1.9 40 . . 84 110 Belgium 17 13 12 12 -25.1 -0.8 1.8 41 . . 87 111 Germany, Fed. Rep. 17 10 11 12 -40.2 9.7 1.5 41 . 112 Denmark 17 13 9 11 -24.9 13.7 1.8 42 67 113 Sweden 15 12 10 12 -20.0 19.4 1.7 40 114 Switzerland 18 12 10 10 -34.8 2.1 1.6 43 Capital-surplus oil exporters 49 w 45w 21 w 12w -8.9w -39.9w 6.8w 41 w 115 Iraq 49 45 20 12 -8.1 -37.5 6.7 41 23 116 Saudi Arabia 49 44 23 14 -10.2 -39.0 7.0 40 117 Libya 49 45 19 12 .-].0 -36.5 7.1 40 118 Kuwait 44 42 10 4 -6.3 -54.2 6.3 42 Nonmarket industrial economies 23 w 18 o 8 or 9w -20.2 or -14.1 w 2.3 w 43 w 119 Bulgaria 18 15 9 11 -14.2 23.5 2.2 41 120 Poland 24 19 8 9 -17.9 9.8 2.3 44 57 121 Hungary 16 15 10 12 0.7 16.7 2.1 41 73 122 USSR 24 18 7 9 -22.1 17.6 2.3 43 123 Czechoslovakia 17 18 10 11 2.9 14.6 2.3 41 66 124 German Dem. Rep. 17 14 13 13 -20.1 0.0 1.8 41 a. Figures in itaios are for years other than those specified See the technica' nofes. b. igures in :ta.ics are for 1957 or 1957-- 79. not for 1960 or 1960-79. 169 Table 19. Labor Force Percentage of population of Percentage of labor force in: Average annual growth working age of labor force (15-64 years) Agriculture Industry Services (percent) 1960 1979 1960 1979 1960 1979 1960 1979 1960-70 1970-80 1980-2000 Low-income countries 56w 59w 76w 71w lOw 14w 14w 15w 1.6w 1.9w 1.6w China and India 61w 71w 15w 14w 1.8w 1.3w Other low-income 55w 54w 79w 70w 8w 11w 13w 19w 2.3 w 2.3 w 1 Kampuchea, Dem. 53 . 82 . . 4 . . 14 . . 2.1 . 2 Lao PDR 56 51 83 76 4 6 13 18 1.4 0.3 2.0 3 Bhutan 56 55 95 93 2 2 3 5 1.7 2.0 2.0 4 Bangladesh 53 54 87 74 3 11 10 15 2.1 3.3 2.6 5 Chad 57 54 95 85 2 7 3 8 1.5 1.8 2.4 6 Ethiopia 54 53 88 80 5 7 7 13 2.0 1.7 2.6 7 Nepal 57 55 95 93 2 2 3 5 1.5 2.1 2.1 8 Somalia 54 54 88 84 4 8 8 8 1.7 2.2 2.0 9 Mali 54 52 94 88 3 5 3 7 2.0 2.2 2.9 10 Burma 59 55 . . 67 . . 10 . . 23 1.1 1.5 2.0 11 Afghanistan 55 53 85 79 6 8 9 13 2.0 2.1 2.4 12 Viet Nam . . . . 81 71 5 10 14 19 . . . . 2.6 13 Burundi 55 55 90 84 3 5 7 11 1.2 1.5 2.2 14 Upper Volta 54 53 92 83 5 12 3 5 1.2 1.2 2.7 15 India 57 56 74 71 11 11 15 18 1.5 1.7 2.0 16 Malawi 52 49 92 86 3 5 5 9 2.3 2.2 3.3 17 Rwanda 53 51 95 91 1 2 4 7 2.4 2.4 3.2 18 Sri Lanka 54 59 56 54 14 14 30 32 2.1 2.0 2.0 19 Benin 53 51 54 46 9 16 37 38 2.1 2.3 2.6 20 Mozambique 56 53 81 67 8 17 11 16 1.9 1.7 2.4 21 Sierra Leone 55 53 78 66 12 19 10 15 1.5 1.8 2.7 22 China . . 64 . . 71 . . 17 . . 12 . . 1.9 0.9 23 Haiti 55 53 80 74 6 7 14 19 0.7 1.2 2.5 24 Pakistan 52 51 61 57 18 20 21 23 1.9 2.6 3.0 25 Tanzania 54 51 89 83 4 6 7 11 2.1 2.7 3.1 26 Zaire 53 53 83 75 9 13 8 12 1.4 2.1 2.7 27 Niger 53 51 95 91 1 3 4 6 3.0 2.6 3.4 28 Guinea 55 53 88 82 6 11 6 7 2.5 2.2 2.3 29 Central African Rep. 58 55 94 88 2 4 4 8 1.7 1.7 2.3 30 Madagascar 55 53 93 87 2 4 5 9 1.7 2.0 2.8 31 Uganda 54 52 89 83 4 6 7 11 3.3 2.5 3.3 32 Mauritania 53 52 91 85 3 5 6 10 2.2 2.4 2.8 33 Lesotho 57 55 93 87 2 4 5 9 1.6 1.9 2.4 34 Togo 53 51 80 68 8 15 12 17 2.2 1.7 2.9 35 Indonesia 56 56 75 59 8 12 17 29 1.7 2.5 2.0 36 Sudan 53 53 86 78 6 10 8 12 2.2 2.4 2.7 Middle-income countries 55 w 55 w 58w 43w 17w 23w 25w 34w 1.9w 2.3 w 2.6 w Oil exporters 52 w 52 w 60w 44w 16w 24w 24w 32w 2.1 w 2.5 w 3.2 w Oil importers 56 w 57 w 57w 42w 17w 23w 25w 35w 1.9w 2.2 w 2.3 w 37 Kenya 50 48 86 38 5 10 9 12 2.7 2.8 3.9 38 Ghana 53 51 64 54 14 20 22 26 1.6 2.4 3.2 39 Yemen Arab Rep. 54 51 83 76 7 11 10 13 1.1 0.7 2.7 40 Senegal 54 53 84 76 5 10 11 14 1.9 1.9 2.5 41 Angola 55 53 69 60 12 16 19 24 1.0 1.9 2.7 42 Zimbabwe 52 50 69 60 11 15 20 25 3.2 2.6 3.5 43 Egypt 55 57 58 50 12 29 30 21 1.9 2.0 2.5 44 Yemen, PDR 52 51 70 4] 15 15 15 38 1.4 1.6 2.9 45 Liberia 52 50 80 71 10 14 10 15 2.4 2.6 3.5 46 Zambia 53 50 79 68 7 11 14 21 2.3 2.4 3.0 47 Honduras 52 50 70 63 11 14 19 23 2.5 3.1 3.5 48 Bolivia 55 53 61 50 18 24 21 26 1.7 2.3 2.9 49 Cameroon 57 54 87 83 5 7 8 10 1.3 1.3 1.8 50 Thailand 53 54 84 77 4 9 12 14 2.0 2.7 2.2 51 Philippines 52 53 61 47 15 17 24 36 2.2 2.4 2.8 52 Congo, Peoples Rep. 56 53 52 35 17 26 31 39 1.5 2.0 2.9 53 Nicaragua 50 50 62 40 16 14 22 46 2.6 3.3 3.8 54 Papua New Guinea 57 55 89 82 4 8 7 10 1.6 1.8 1.5 55 El Salvador 52 51 62 51 17 22 21 27 2.6 2.8 3.5 56 Nigeria 52 50 71 55 10 18 19 27 1.8 1.7 3.3 57 Peru 52 54 53 38 19 20 28 42 2.0 3.0 3.1 58 Morocco 53 50 63 53 14 21 23 26 1.6 3.0 3.5 59 Mongolia 54 53 70 56 13 22 1] 22 2.1 2.5 3.3 60 Albania 54 57 71 61 18 25 11 14 2.3 2.8 2.4 61 Dominican Rep. 49 52 67 50 12 18 21 32 2.3 3.4 3.3 62 Colombia 50 59 51 27 19 21 30 52 3.0 3.6 2.5 63 Guatemala 51 53 67 56 14 21 19 23 2.5 3.0 2.9 64 Syrian Arab Rep. 52 48 54 32 19 31 27 37 2.1 3.3 3.7 170 Percentage of population of Percentage of labor force in: Average annual growth working age of labor force (15-64 years) Agriculture Industry Services (percent) 1960 1979 1960 1979 1960 1979 1960 1979 1960-70 1970-80 1980-2000 65 Ivory Coast 54 54 89 79 2 4 9 17 3.6 5.0 2.8 66 Ecuador 52 52 57 52 19 18 24 30 3.0 3.3 3,3 67 Paraguay 51 52 56 50 19 19 25 31 2.4 3.1 3.4 68 Tunisia 53 55 56 35 18 32 26 33 0,7 3.0 2.7 69 Korea, Dem. Rep. 53 56 62 50 23 32 15 18 2.3 2.9 2.8 70 Jordan 52 51 44 21 26 19 30 60 2.8 3.1 3.4 71 Lebanon 53 55 38 12 23 26 39 62 2.1 1.3 2.8 72 Jamaica 54 52 39 22 25 25 36 53 0.4 2.2 3.3 73 Turkey 55 56 78 54 11 13 11 33 1.4 2.2 2.4 74 Malaysia 51 55 63 51 12 16 25 33 2.8 2.6 2.9 75 Panama 52 56 51 34 14 18 35 48 3.4 2.4 2.6 76 Cuba 61 60 39 24 22 31 39 45 0.8 2.0 1.9 77 Korea, Rep. of 54 61 66 36 9 30 25 34 3.0 2.8 2.1 78 Algeria 52 49 67 32 12 24 21 44 1.0 3.4 3.5 79 Mexico 51 51 55 37 20 26 25 37 2.8 3,0 3.6 80 Chile 57 62 30 20 20 20 50 60 1.4 1.9 2.1 81 South Africa 55 54 32 30 30 29 38 41 3.2 2.6 3.2 82 Brazil 54 55 52 40 15 22 33 38 2.8 2.2 2.7 83 Costa Rica 50 57 51 30 19 23 30 47 3.5 3.6 2.7 84 Romania 65 64 65 33 15 34 20 33 0.9 0.6 0.7 85 Uruguay 64 63 21 11 29 32 50 57 0.9 0.1 1,1 86 Iran 51 52 54 40 23 33 23 27 2.5 2.7 3.2 87 Portugal 63 63 44 25 29 36 27 39 (.) 1.1 0.9 88 Argentina 64 63 20 13 36 28 44 59 1.3 1.4 1.2 89 Yugoslavia 63 66 63 31 18 33 19 36 0.6 0.6 0.6 90 Venezuela 51 55 35 19 22 27 43 54 2.8 4.0 3.2 91 Trinidad and Tobago 53 61 22 16 34 36 44 48 2.4 2.6 2.1 92 Hong Kong 56 65 8 3 52 57 40 40 3.2 3.8 1.2 93 Singapore 55 66 8 2 23 38 69 60 2,8 2.7 1.4 94 Greece 65 64 56 38 20 28 24 34 (.) 0.5 0.5 95 Israel 59 59 14 7 35 36 51 57 3.6 2.5 2.1 96 Spain 64 63 42 15 31 40 27 45 0.2 1.1 0.9 Industrial market economies 63w 66w 16w 6w 39w 38w 45w 56w 1.2w 1.2w 0.6w 97 Ireland 58 58 36 19 25 37 39 44 (.) 1.0 1.5 98 Italy 66 65 31 11 40 45 29 44 -0.1 0.7 0.4 99 New Zealand 59 63 15 9 37 35 48 56 2.2 2.1 1.2 100 United Kingdom 65 64 4 2 48 42 48 56 0.6 0.3 0.3 101 Finland 62 68 36 12 31 35 33 53 0.4 1,1 0.4 102 Austria 66 64 24 9 46 37 30 54 -0.6 0.8 0.4 103 Japan 64 68 33 13 30 38 37 49 1.9 1.3 0.8 104 Australia 61 65 11 6 40 33 49 61 2.6 1.8 1.0 105 Canada 59 67 13 5 35 29 52 66 2.6 2.0 0.9 106 France 62 64 22 9 39 39 39 52 0.6 1.0 0.6 107 Netherlands 61 66 11 6 42 45 47 49 1.6 1.3 0.6 108 United States 60 66 7 2 36 32 57 66 1.8 1.8 0.9 109 Norway 63 63 20 8 37 38 43 54 0.5 0.7 0.6 110 Belgium 65 65 8 3 48 41 44 56 0.3 0.7 0.2 111 Germany, Fed. Rep. 68 66 14 4 48 47 38 49 0.2 0.7 (.) 112 Denmark 64 65 18 7 37 36 45 57 1.1 0.6 0.5 113 Sweden 66 64 14 5 45 35 41 60 1.0 0.3 0.3 114 Switzerland 66 66 11 5 50 46 39 49 2.0 0.5 0.3 Capital-surplus oil exporters 53w 51 w 58w 44w 16w 22w 26w 34w 3.2w 3.6w 3.1 w 115 Iraq 51 51 53 43 18 26 29 31 2.9 2.9 3.3 116 Saudi Arabia 54 52 71 62 10 14 19 24 3.1 4.5 2.7 117 Libya 53 51 53 20 17 27 30 53 3.6 3.7 3.1 118 Kuwait 63 52 1 2 34 34 65 64 7.5 4.5 3.1 Nonmarket industrial economies 63w 66w 41 w 17w 31w 44w 28w 39w 0.8w 1.2w 0.6 w 119 Bulgaria 66 66 57 38 25 38 18 24 0.7 0.4 0.4 120 Poland 61 66 48 31 29 39 23 30 1.8 1.5 0.8 121 Hungary 66 66 38 16 35 52 27 32 0.5 0.4 0.2 122 USSR 63 66 42 15 29 44 29 41 0.7 1.3 0.6 123 Czechoslovakia 64 64 26 11 46 48 28 41 0.9 0.8 0.7 124 German Dem, Rep. 65 64 18 10 48 50 34 40 -0.2 0.5 0.3 171 Table 20. Urbanization Percentage of urban population Urban population Number of In cities cities As percentage Average annual In of over of over of total growth rate largest 500,000 500,000 population (percent) city persons persons 1960 1980 1960-70 1970-80 1960 1980 1960 1980 1960 1980 Low-income countries 15w 17w 3.8 w 3.7 ?' 11w 13 w 31 w 42 w 58 t 144 China and India 17w 3.2w 7w 6w 33 w 42 w 48 106 t Other low-income 12 w 19w 4.7 w 5.0 w 24 w 27 w 23 w 42 w 10 38 t 1 Kampuchea, Dem. 11 3.6 2 Lao PDR 8 14 4.1 4.8 69 48 'o 'a 0 0 3 Rhutan 3 4 4.1 4.5 0 0 0 0 4 Bangladesh 5 11 6.3 6.8 Ô 3Ô 20 51 3 5 Chad 7 18 6.7 6.5 39 0 0 0 0 6 Ethiopia 6 15 6.1 6.6 30 37 0 37 0 7 Nepal 3 5 4,3 4,7 41 27 0 0 0 8 Somalia 17 30 5.3 5.0 34 0 0 0 0 9 Mali 11 20 5.4 5.5 32 34 0 0 0 0 10 Burma 19 27 3.9 3.9 23 23 23 29 2 11 Afghanistan 8 15 5.5 5,9 33 17 0 17 0 1 12 Viet Nam 15 19 5.3 3.3 32 21 32 50 1 4 13 Burundi 2 2 1.6 2.5 0 0 0 0 14 Upper Volta 5 9 5,3 3.8 0 0 0 0 15 India 18 22 3.3 3.3 6 26 39 11 36 16 Malawi 4 10 6.6 6.8 19 0 0 0 0 17 Rwanda 2 4 5.6 5.9 0 0 0 0 18 Sri Lanka 18 27 4.3 3.6 ?è 0 16 0 1 19 Benin 10 14 5.3 3,9 63 0 63 0 1 20 Mozambique 4 9 6.6 6.8 75 83 0 83 0 1 21 Sierra Leone 13 25 5,5 5.6 37 47 0 0 0 0 22 China 13 3.1 6 6 42 45 38 70 23 Haiti 16 28 4. ó 4.9 42 56 0 56 0 1 24 Pakistan 22 28 4.0 4.3 20 21 33 51 2 7 25 Tanzania 5 12 6.3 8.7 34 50 0 50 0 1 26 Zaire 16 34 5.2 7.2 14 28 14 38 1 2 27 Niger 6 13 7.0 6.8 31 0 0 0 0 28 Guinea 10 18 6.2 5.5 37 80 0 80 0 1 29 Central African Rep. 23 41 5.3 5.0 40 36 0 0 0 0 30 Madagascar 11 18 5.0 5.2 44 36 0 36 0 1 31 Uganda 5 12 7.8 7.0 38 52 0 52 0 1 32 Mauritania 3 23 15.8 8.6 39 0 0 0 0 33 Lesotho 2 5 7.5 7.7 0 0 0 0 34 Togo 10 .20 5.6 6.6 60 0 0 O 0 35 Indonesia 15 20 3.6 4.0 20 23 34 50 3 9 36 Sudan 10 25 6.9 6.8 30 31 0 31 0 1 Middle-income countries 37 w 50 w 4.1w 3.8w 28w 29 w 35w 48w 56 f 125 t Oil exporters 33w 45 w 4.5w 4.3w 29 w 30w 32w 46w 9t 31 t Oil importers 39 w 52 w 4.0 w 3.5 w 28 w 27 w 36w 48w 47 t 94 t 37 Kenya 7 14 6.4 6.8 40 57 0 57 0 1 38 Ghana 23 36 4.6 5.1 25 35 0 48 0 2 39 Yemen Arab Rep. 3 10 7.5 7.2 25 0 0 0 0 40 Senegal 23 25 2.9 3,3 53 65 0 65 0 1 41 Angola 10 21 5.1 5.7 44 64 0 64 0 1 42 Zimbabwe 13 23 6.8 6.4 40 50 0 50 0 1 43 Egypt 38 45 3.3 2.8 38 39 53 53 2 2 44 Yemen, PDR 28 37 3.2 3.7 61 49 0 0 0 0 45 Liberia 21 33 5.6 5.6 0 0 0 0 46 Zambia 23 38 5.4 5.5 35 0 35 0 1 47 Honduras 23 36 5.4 5.5 31 33 0 0 0 0 48 Bolivia 24 33 3.9 4.1 47 44 0 44 0 1 49 Cameroon 14 35 5.6 7.5 26 21 0 21 0 1 50 Thailand 13 14 3.5 3.3 65 69 65 69 1 1 51 Philippines 30 36 3.8 3.6 27 30 27 34 1 2 52 Congo, People's Rep. 30 45 4.7 4.1 77 56 0 0 0 0 53 Nicaragua 41 53 4.2 4.5 41 47 0 47 0 1 54 Papua New Guinea 3 20 15.2 8.7 25 0 0 0 0 55 El Salvador 38 41 3.2 3.3 26 22 0 0 0 0 56 Nigeria 13 20 4.7 4.7 13 17 22 58 2 9 57 Peru 46 67 4.9 4.3 38 39 38 44 1 2 58 Morocco 29 41 4.2 4.6 16 26 16 50 1 4 59 Mongolia 36 51 5.2 4.1 53 52 0 0 0 0 60 Albania 31 37 3.7 3.4 27 25 0 0 0 0 61 Dominican Rep. 30 51 5.8 5.3 50 54 0 54 0 1 62 Colombia 48 70 5.2 3,9 17 26 28 51 3 4 63 Guatemala 33 39 3.6 3.7 41 36 41 36 1 1 64 Syrian Arab Rep. 37 50 4.8 5.0 35 33 35 55 1 2 172 Percentage of urban population Urban population Number of In cities cities As percentage Average annual In of over of over of total growth rate largest 500,000 500,000 population (percent) city persons persons 1960 1980 1960-70 1970-80 1960 1980 1960 1980 1960 1980 65 Ivory Coast 19 38 7.3 8.5 27 34 0 34 0 1 66 Ecuador 34 45 4.5 4.5 31 29 0 51 0 2 67 Paraguay 36 39 3.0 3.5 44 44 0 44 0 1 68 Tunisia 36 52 3.8 3.9 40 30 40 30 1 1 69 Korea, Dem. Rep. 40 60 5.0 4.3 15 12 15 19 2 70 Jordan 43 56 4.5 4.7 31 37 0 37 C 1 71 Lebanon 44 76 6.2 2.8 64 79 64 79 1 1 72 Jamaica 34 50 3.5 3.4 77 66 0 66 C 1 73 Turkey 30 47 5.1 4.6 18 24 32 42 3 4 74 Malaysia 25 29 3.6 3.1 19 27 0 27 0 1 75 Panama 41 54 4.4 3.6 61 66 0 66 0 1 76 Cuba 55 65 2.9 2.2 38 32 38 32 1 1 77 Korea, Rep. of 28 55 6.3 4.8 35 41 61 77 3 7 78 Algeria 30 44 3.9 5.8 27 12 27 12 1 1 79 Mexico 51 67 4.8 4.2 28 32 36 48 3 7 80 Chile 68 80 3.1 2.3 38 44 38 44 1 1 81 South Africa 47 50 2.8 3.1 16 13 44 53 4 7 82 Brazil 46 65 4.8 3.7 14 16 35 52 6 14 83 Costa Rica 37 43 4.2 3.3 67 64 0 64 0 1 84 Romania 34 48 2.8 2.5 22 17 22 17 1 1 85 Uruguay 80 84 1.3 0.6 56 52 56 52 1 1 86 Iran 34 50 4.7 4.9 26 28 26 47 1 6 87 Portugal 23 31 1.3 2.9 47 44 47 44 1 1 88 Argentina 74 82 2.0 2.1 46 45 54 60 3 5 89 Yugoslavia 28 42 3.2 2.9 11 10 11 23 1 3 90 Venezuela 67 83 4.7 4.2 26 26 26 44 1 4 91 Trinidad and Tobago 22 22 1.7 1.3 . . . . 0 0 0 0 92 Hong Kong 89 90 2.6 2.7 100 100 100 100 1 1 93 Singapore 100 100 2,4 1.4 100 100 100 100 1 1 94 Greece 43 62 2.6 2.2 51 57 51 70 1 1 95 Israel 77 89 4.3 3.2 46 35 46 35 1 1 96 Spain 57 74 2.6 2.2 13 17 37 44 5 6 Industrial market economies 68w 73w 1.8w 1.3w 18w 18w 48w 55w 991 1461 97 Ireland 46 58 1.6 2.2 51 48 51 48 98 Italy 59 69 ' 1.5 1.3 13 17 46 52 7 99 New Zealand 76 85 2.4 1.9 25 30 0 30 0 100 United Kingdom 86 91 0.9 0.3 24 20 61 55 15 17 101 Finland 38 62 3.2 2.7 28 27 0 27 0 102 Austda 50 54 0.9 0.5 51 39 51 39 1 1 103 Japan 62 78 2.4 2.0 18 22 35 42 5 9 104 Australia 81 89 2.5 1.9 26 24 62 68 4 5 105 Canada 69 80 2.7 1.7 14 18 31 62 2 9 106 France 62 78 2.4 1.4 25 23 34 34 4 6 107 Netherlands 80 76 1.0 0.6 9 9 27 24 3 3 108 United States 67 73 1.7 1.5 13 12 61 77 40 65 109 Norway 32 53 3.5 2.8 50 32 50 32 1 1 110 Belgium 66 72 1.2 0.4 17 14 28 24 2 2 111 Germany, Fed. Rep. 77 85 1.4 0.4 20 18 48 45 11 11 112 Denmark 74 84 1.5 0.9 40 32 40 32 1 1 113 Sweden 73 87 1.8 1.0 15 15 15 35 1 3 114 Switzerland 51 58 2.2 1.0 19 22 19 22 1 1 Capital-surplus oil exporters 37 w 69 w 7.4 w 6.7 w 33 w 42 w 22 w 53 w 1! 61 115 Iraq 43 72 6.2 5.4 35 55 35 70 1 3 116 Saudi Arabia 30 67 8.4 7.6 15 18 0 33 0 2 117 Libya 23 52 8.0 8.3 57 64 0 64 0 1 118 Kuwa4 72 88 10.4 7.4 75 30 0 0 0 0 Nonmarket industrial economies 49 u' 64 w 2.5 w 2.1 w 9w 7w 23 w 32 w 35 1 64 119 Bulgaria 39 64 3.8 2.6 23 18 23 18 120 Poland 48 57 1.8 1.] 17 15 41 47 121 Hungary 40 54 1.7 2.1 45 3] 45 37 122 USSR 49 65 2.8 2.2 6 4 21 33 25 50 123 Czechoslovakia 47 63 2.1 2.0 17 12 17 12 124 German Dem. Rep. 72 77 0.1 0.3 9 9 14 17 2 3 173 Table 21. Indicators Related to Life Expectancy Life Infant Child expectancy mortality death at birth rate rate (years) (aged 0_1)a (aged 1-4) 1960 1979 1960 1978 1960 1979 Low-income countries 42 w 57 29 w 17 w China and India 59w Other low-income 51 w 31w 18w 1 Kampuchea, Dem. 43 27 2 Lao PDR 40 42 30 27 3 Bhutan 36 44 36 25 4 Bangladesh 43 49 25 19 5 Chad 35 41 45 35 6 Ethiopia 36 40 172 43 36 7 Nepal 3] 44 35 25 8 Somalia 36 44 43 30 9 Mali 37 43 41 31 10 Burma 44 54 24 13 11 Afghanistan 34 41 . . 237 40 29 12 Viet Nam 43 63 62 26 5 13 Burundi 37 42 . . 41 33 14 Upper Volta 37 43 263 . . 41 31 15 India 42 52 125 27 15 16 Malawi 37 4] . . 41 25 17 Rwanda 37 47 . . . . 41 25 18 Sri Lanka 62 66 55 49 6 3 19 Benin 37 47 206 . . 41 25 20 Mozambique 37 47 . . 41 25 21 Sierra Leone 3] 47 . . 41 25 22China .. 64 56 23 Haiti 44 53 . . 36 21 24 Pakistan 44 52 135 24 15 25 Tanzania 42 52 . . 32 18 26 Zaire 40 47 36 25 27 Niger 37 43 200 41 31 28 Guinea 35 44 141 45 28 29 Central African Rep. 36 44 43 30 30 Madagascar 37 47 41 25 31 Uganda 44 54 159 29 16 32 Mauritania 37 43 186 41 29 33 Lesotho 42 51 33 20 34 Togo 3] 47 41 25 35 Indonesia 39 53 15 a 31 14 36 Sudan 39 47 47 29 Middle-income countries 53 w 61 w 19w 10 w Oil exporters 47w 57w 27 w 14w Oil importers 55 w 63w 16w 8w 37 Kenya 41 55 126 91 34 15 38 Ghana 40 49 141 36 22 39 Yemen Arab Rep. 36 42 . 54 41 40 Senegal 37 43 . . . 41 31 41 Angola 33 42 . . 49 33 42 Zimbabwe 45 55 . . . S 28 15 43 Egypt 46 57 109 85 32 15 44 Yemen, PDR 36 45 54 34 45 Liberia 44 54 29 16 46 Zambia 40 49 . . . 36 22 47 Honduras 46 58 130 118 32 14 48 Bolivia 43 50 150 . . 39 23 49 Cameroon 37 4] 172 157 41 25 50 Thailand 51 62 68 16 6 51 Philippines 51 62 98 65 16 6 52 Congo, Peoples Rep. 37 4] . 41 27 53 Nicaragua 4] 5 . . . 30 16 54 Papua New Guinea 41 51 159 . . 29 16 55 El Salvador 50 63 60 23 8 56 Nigeria 39 49 . . 36 22 57 Peru 48 58 . . 86 29 14 58 Morocco 4] 56 30 16 59 Mongolia 52 63 . . 15 5 60 Albania 62 70 83 . 6 2 61 Dominican Rep. 51 61 . 37 23 10 62 Colombia 53 63 77 65 20 8 63 Guatemala 47 59 113 30 13 64 Syrian Arab Rep. 50 65 25 7 174 Life Infant Child expectancy mortality death at birth rate rate (years) (aged 0_1)a (aged 1-4) 1960 1979 1960 1978 1960 1979 65 Ivory Coast 37 47 . . . . 41 25 66 Ecuador 51 61 140 66 23 10 67 Paraguay 56 64 . . . . 16 7 68 Tunisia 48 58 148 90 28 13 69 Korea, Dem. Rep. 54 63 . . 12 5 70 Jordan 4] 61 . . 9] 30 10 71 Lebanon 58 66 . . . . 13 6 72 Jamaica 64 71 52 16 7 3 73 Turkey 51 62 194 . . 23 9 74 Malaysia 53 68 . . 32 13 2 75 Panama 62 70 90 47 9 3 76Cuba 63 72 .. 25 8 2 77 Korea, Rep. of 54 63 62 37 12 5 78 Algeria 47 56 . . S S 30 16 79 Mexico 58 66 78 60 13 5 80 Chile 5] 6] 108 65 15 6 81 South Africa 53 61 . . . . 17 9 82 Brazil 55 63 128 92 17 8 83 Costa Rica 62 70 80 28 9 3 84 Romania 65 71 76 31 4 1 85 Uruguay 68 71 47 34 4 3 86 Iran 46 54 . . . . 22 12 87 Portugal 63 71 78 39 5 1 88 Argentina 65 70 62 . . 6 3 89 Yugoslavia 63 70 88 34 5 2 90 Venezuela 59 6] 72 40 12 5 91 Trinidad and Tobago 64 70 45 29 7 3 92 Hong Kong 65 76 42 12 4 (.) 93 Singapore 65 71 35 13 4 1 94 Greece 69 74 40 20 2 1 95 Israel 69 72 31 18 4 2 96 Spain 68 73 44 15 2 1 Industrial market economies 70w 74w 29w 13w 1w 1w 97 Ireland 70 73 29 16 2 1 98 Italy 69 73 44 18 2 1 99 New Zealand 72 73 23 14 1 1 100 United Kingdom 71 73 22 14 1 1 101 Finland 68 73 21 9 2 1 102 Austria 69 72 38 15 1 1 103 Japan 68 76 30 9 2 (.) 104 Australia 71 74 20 13 1 1 105 Canada 71 74 27 12 1 1 106 France 70 74 27 11 1 1 107 Netherlands 73 75 18 10 1 (.) 108 United States 70 74 26 14 1 1 109 Norway 73 75 19 9 1 (.) 110 Belgium 70 72 31 12 1 1 111 Germany, Fed. Rep. 70 73 34 16 2 1 112 Denmark 72 75 22 9 1 1 113 Sweden 73 76 17 8 1 (.) 114 Switzerland 71 75 21 10 1 (.) Capital-surplus oil exporters 46w 56w 32w 16w 115 Iraq 47 56 92 30 16 116 Saudi Arabia 43 54 38 19 117 Libya 47 56 30 16 118 Kuwait 60 70 11 3 Nonmarket industrial economies 68w 72w 36w 20w 2w 1w 119 Bulgaria 69 73 45 22 2 120 Poland 67 72 56 22 3 121 Hungary 68 71 48 24 2 122 USSR 68 73 33 . . 2 123 Czechoslovakia 70 71 24 19 2 124 German Oem. Rep. 69 72 39 13 2 a. Figures n italics are for years other than those spec!fied. See the technical notes. 175 Table 22. Health-related Indicators Daily per capita Percentage calorie supplya Population per: of population Physiciarla Nursing persona with access As percentage to safe water Total of requirement 1960 1977 1960 1977 1975 1977 1977 Low-income countries 11,680w 6,150w 5,700w 6,200w 29w 2,231 w 98w China and India 3,730w 2,160w 5,510w 2,900w 2,279 w 99w Other low-income 39,290w 16,380w 7,370 w 14,890 w w 2,108w 96 w 1 Kampuchea, Dem. 34,830 . . . . 1,926 85 2 Lao PDR 54,140 20,060 3,040 2,082 94 3 Bhutan . . . . . . 2,028 88 4 Bangladesh . . 8,780 . . 56,880 53 2,100 91 5 Chad 72,190 41,940 8,040 4,810 26 1,762 74 6 Ethiopia 100,470 75,320 14,920 5,400 6 1,754 75 7 Nepal 72,870 35,250 . . 53,540 9 2,002 91 8 Somalia 36,570 . . 6,220 . . 33 2,033 88 9 Mali 67,050 25,150 4,980 3,230 9 2,117 90 10 Burma 15,560 5,120 . . 6,120 17 2,286 106 11 Afghanistan 28,140 20,550 23,210 25,920 6 2,695 110 12 Viet Nam . . 5,620 . . 900 1,801 83 13 Burundi 96,570 45,020 6,770 6,180 . 2,254 97 14 Upper Volta 81,650 49,810 4,090 4,510 25 1,875 79 15 India 4,850 3,620 9,630 6,430 33 2,021 91 16 Malawi 35,250 40,680 12,920 2,790 33 2,066 90 17 Rwanda 138,100 38,920 11,200 10,490 35 2,264 98 18 Sri Lanka 4,490 6,750 4,150 2,050 20 2,126 96 19 Benin 23,030 26,880 . . 3,040 21 2,249 98 20 Mozambique 20,390 33,980 4,720 1,906 81 21 Sierra Leone 20,420 . . 5,900 . . 2,150 93 22 China 3,010 1,160 2,850 480 . 2,453 104 23 Haiti 9,230 5,940 10,340 4,230 14 2,100 93 24 Pakistan 11,000 3,760 . . 9,980 29 2,281 99 25 Tanzania 18,220 17,550 10,440 3,080 39 2,063 89 26 Zaire 37,620 15,530 3,510 1,940 16 2,271 104 27 Niger 82,170 42,720 8,450 6,270 27 2,139 91 28 Guinea 48,000 16,630 3,260 2,490 10 1,943 84 29 Central African Rep. 41,580 17,610 2,760 1,560 16 2,242 99 30 Madagascar 8,900 10,240 3,110 3,470 26 2,486 115 31 Uganda 14,060 27,600 9,420 4,300 35 2,110 91 32 Mauritania 40,400 15,160 7,320 3,430 . . 1,976 86 33 Lesotho 23,510 18,640 . . 4,340 17 2,245 99 34 Togo 35,760 17,980 5,340 2,000 16 2,069 90 35 Indonesia 46,780 13,640 . . 8,850 12 2,272 105 36 Sudan 33,500 8,690 3,040 1,280 46 2,184 93 Middle-income countries 10,430 w 4,380 w 3,390w 1,820w 58w 2,581 w 109 w Oil exporters 22,320 w 5,940 w 4,820w 2,120w 60w 2,458 w 103 w Oil importers 4,570w 3,580w 2,790w 1,610w 57 w 2,641 w 112w 37 Kenya 10,690 11,630 2,230 1,090 17 2,032 88 38 Ghana 21,600 9,920 5,430 860 35 1,983 86 39 Yemen Arab Rep. . 12,460 . . 5,660 4 2,192 91 40 Senegal 24,540 15,710 4,110 1,660 37 2,261 95 41 Angola 14,910 . . . . . . 2,133 91 42 Zimbabwe 4,790 7,030 1,010 1,380 . . 2,576 108 43 Egypt 2,560 1,050 2,730 1,100 66 2,760 109 44 Yemen, PDR 13,760 7,760 . . 1,620 24 1,945 81 45 Liberia 12,600 9,260 5,810 2,900 20 2,404 104 46 Zambia 9,540 10,190 9,920 1,930 42 2,002 87 47 Honduras 12,610 3,290 1,240 46 2,015 89 48 Bolivia 3,830 1,850 . . 3,070 38 1,974 83 49 Cameroon 48, 110 16,500 6,150 2,230 26 2,069 89 50 Thailand 8,000 8,150 4,900 3,540 22 1,929 105 51 Philippines 6,930 2,760 . . 3,110 43 2,189 108 52 Congo, People's Rep. 16,430 7,290 1,510 800 17 2,284 103 53 Nicaragua 2,740 1,670 5,460 800 70 2,446 109 54 Papua New Guinea 14,390 14,040 2,450 1,930 20 2,268 85 55 El Salvador 5,260 3,600 . . 1,310 53 2,051 90 56 Nigeria 73,710 15,740 6,020 4,030 . . 1,951 83 57 Peru 2,010 1,550 2,210 750 48 2,274 97 58 Morocco 9,410 11,040 . . 1,690 55 2,534 105 59 Mongolia 1,070 480 300 250 2,523 104 60 Albania 3,630 960 540 370 . . 2,730 113 61 Dominican Rep. 55 2,094 93 62 Colombia 2,640 1,970 3,740 1,250 64 2,364 102 63 Guatemala 4,410 2,490 9,040 . . 40 2,156 98 64 Syrian Arab Rep. 4,630 2,570 6,660 3,890 75 2,684 108 176 Daily per capita Percentage calorie supplya Population per: of population Physiciana Nursing persona with access As percentage to safe water Total of requirement 1960 1977 1960 1977 1975 1977 1977 65 Ivory Coast 29,190 15,220 2,920 2,370 19 2,517 105 66 Ecuador 2,660 1,620 2,280 . . 42 2104 92 67 Paraguay 1,800 2,150 2,260 13 2824 122 68 Tunisia 10,030 4,800 1,070 70 2,674 112 69 Korea, Dem. Rep. . . . . . . . . 2,837 121 70 Jordan 5,800 1,960 1,650 820 61 2,107 62 71 Lebanon 1,210 . . . . . . . . 2,495 101 72 Jamaica 2,590 3,520 1,990 550 86 2,660 119 73 Turkey 3,000 1,770 . . 1,460 75 2,907 115 74 Malaysia 7,470 8,730 1,780 1,290 62 2,610 117 75 Panama 2,730 1,220 3,460 1,410 79 2,341 101 76 Cuba 1,060 1,110 970 . . . 2,720 118 77 Korea, Rep. of 3,540 1,990 3,220 550 71 2,785 119 78 Algeria 5,230 5,330 1,480 77 2,372 99 79 Mexico 1,800 1,820 . . 1,400 62 2,654 114 80 Chile 1,780 1,620 640 440 84 2,656 109 81 South Africa 2,180 . . 540 . . 2,831 116 82 Brazil 2,560 1,700 2,770 . . 77 2,562 107 83 Costa Rica 2,700 1,390 710 590 77 2,550 114 84 Romania 780 740 620 640 . . 3,444 130 85 Uruguay 960 540 . . 3,700 84 3,036 114 86 Iran 4,090 . . 8,160 . . 51 3,138 130 87 Portugal 1,200 700 1,430 500 65 3,076 126 88 Argentina 740 530 . . . . 66 3,347 126 89 Yugoslavia 1,620 760 1,350 410 3,445 136 90 Venezuela 1,510 930 1,890 380 . . 2,435 99 91 Trinidad and Tobago 2,390 1,970 . . 580 2,694 111 92 Hong Kong 3,070 1,180 2,950 1,090 . . 2,883 126 93 Singapore 2,360 1,250 650 380 100 3,074 134 94 Greece 790 450 2,080 600 3,400 136 95 Israel 400 310 360 . . 3,141 122 96 Spain 820 560 1,290 900 . . 3,149 128 Industrial market economies 830 w 620 w 450 w 220 w 3,377 w 131 w 97 Ireland 950 830 190 200 . . 3,541 141 98 Italy 640 490 920 330 . . 3,428 136 99 New Zealand 690 . 740 . . 200 . . 3,345 127 100 United Kingdom 1,090 750 420 300 . . 3,336 132 101 Finland 1,570 630 220 110 3,100 114 102 Austria 550 430 600 260 3,535 134 103 Japan 930 850 460 290 2,949 126 104 Australia 860 650 . . 120 3,428 129 105 Canada 910 560 300 130 . . 3,374 127 106 France 930 610 530 170 . . 3,434 136 107 Netherlands 900 580 . . 270 . . 3,338 124 108 United States 750 570 340 750 3,576 135 109 Norway 850 540 330 100 3,175 118 110 Belgium 780 440 450 250 . . 3,583 136 111 Germany, Fed. Rep. 670 490 450 260 . . 3,381 127 112 Denmark 810 510 270 150 3,418 127 113 Sweden 1,150 560 . . 130 . . 3,221 120 114 Switzerland 740 510 390 220 . . 3,485 130 Capital-surplus oil exporters 8,920w 1,810w 5,810w 1,860w 68w 2,407w 93w 115 Iraq 5,270 2,190 6,680 2,990 62 2,134 89 116 Saudi Arabia 16,370 1,700 5,850 950 64 2,624 88 117 Libya 6,580 900 2,390 280 100 2,985 126 118 Kuwait 1,150 790 790 290 89 Nonmarket industrial economies 660 w 350 w 360 w 210 w 3,489w 136w 119 Bulgaria 710 440 550 240 3,611 144 120 Poland 1,070 610 490 270 3,656 140 121 Hungary 720 430 350 200 3,521 134 122 USSR 560 290 340 210 3,460 135 123 Czechoslovakia 620 390 280 760 3,340 139 124 German Dem. Rep. 1,180 530 . . 3,641 139 a. Figures in italics are br years other than those specified. See the technical notes, 177 Table 23. Educationa Number Number enrolled in enrolled in Number enrolled in primary school secondary higher education Adult as percentage of age group school as as percentage literacy percentage of of population rate Total Male Female age group aged 20-24 (percent) 1960 1978 1960 1978 1960 1978 1960 1978 1960 1977 1960 1976 Low-income countries 76 w 83 w 71 w 92 w 37 w 63 w 14 w 36 w 2w 3w 28w 51w China and India 86 w 87 w 42 w 4w 54w Other low-income 46 w 74 w 59 w 89 w 33 w 63 w 6w 20 w w 2w 27 u' 43 w 1 Kampuchea, Dem. 64 82 46 3 (.) 36 2 Lao PDR 25 92 34 99 16 85 1 14 (.) 28 3 Bhutan 3 12 5 16 (.) 7 .. 1 .. (.) 4 Bangladesh 47 72 66 103 26 40 8 22 1 3 22 26 5 Chad 17 35 29 51 4 19 (.) 3 S S (.) 6 15 6 Ethiopia 7 38 11 .. 3 .. (.) 9 (.) (.) .. 15 7 Nepal 10 69 19 104 31 6 14 1 2 9 19 8 Somalia 9 44 13 57 5 32 1 4 (.) 1 2 60 9 Mali 10 28 14 36 6 20 1 9 .. 1 3 10 10 Burma 56 84 61 87 52 81 10 22 1 2 60 67 11 Afghanistan 9 20 15 33 2 6 1 7 (.) 1 8 12 12 Viet Nam . 122 . . 128 . . 116 . . 51 .. 3 . . 87 13 Burundi 18 21 27 26 9 17 1 3 (.) (.) 14 25 14 Upper Volta 8 17 12 21 5 12 (.) 2 . . (.) 2 15 lnda 61 79 80 94 40 63 20 28 3 8 28 36 16 Malawi . S 59 . . 73 .. 51 1 4 . (.) . 25 17 Rwanda 49 64 68 68 30 59 2 2 . (.) 16 18 Sri Lanka 95 94 100 98 90 90 27 52 1 1 75 85 19 Benin 26 60 38 78 15 42 2 12 . . 1 8 20 Mozambique 48 . 60 . . 36 . . 2 . . . . (.) 11 21 Sierra Leone 23 37 30 45 15 30 2 12 (.) 1 7 22 China 102 93 . . . . . 51 . . 1 . . 66 23 Haiti 46 58 50 . . 42 . 4 9 (.) 1 15 24 Pakistan 30 51 46 69 13 32 11 17 1 2 15 24 25 Tanzania 25 70 33 80 18 61 2 4 . (.) 10 66 26 Zaire 60 90 88 103 32 77 3 19 (.) . . 31 15 27 Niger 5 23 7 29 3 17 (.) 3 (.) 1 8 28 Guinea 30 34 44 46 16 22 2 16 . . 7 20 29 Central African Rep. 32 78 53 101 12 55 1 9 . . 1 7 30 Madagascar 52 94 58 100 45 87 4 12 (.) 2 . . 50 31 Uganda 49 50 65 58 32 41 3 5 (.) 1 35 32 Mauritania 8 26 13 34 3 17 (.) 5 .. (.) 5 17 33 Lesotho 83 101 63 82 102 122 3 17 (.) . . . . 52 34 Togo 44 102 63 129 24 75 2 25 . . 1 10 18 35 Indonesia 71 94 86 100 58 89 6 22 1 2 39 62 36 Sudan 25 50 35 58 14 42 3 16 (.) 2 13 20 Middle-income countries 79 w 95 w 85 w 103 w 72 w 94 w 16 w 41 w 4 U) 11 w 53 w 72 w Oil exporters 60w 91 w 71 w 110w 50w 91 w 11 w 34w 3w 8w 34w 64w Oil importers 8] w 97 w 92 w 100 w 83 w 95 w 19 w 44 w 5w 13 w 62 w 76 w 37 Kenya 47 99 64 105 30 94 2 18 (.) 1 20 45 38 Ghana 38 71 52 80 25 61 5 32 (.) 1 27 39 Yemen Arab Rep. 8 29 14 50 (.) 7 (.) 4 . . 1 3 13 40 Senegal 2] 41 36 50 1] 32 3 10 1 2 6 10 41 Angola 21 . . 28 . . 13 . . 2 . . (.) . . 5 42 Zimbabwe 96 97 107 105 86 90 6 9 (.) . . 39 43 Egypt 66 74 80 88 52 58 16 47 5 14 26 44 44 Yemen, PDR 13 72 20 92 5 51 5 28 . . 2 . . 27 45 Liberia 31 64 45 80 18 48 2 20 (.) 2 9 30 46 Zambia 42 98 51 106 34 89 2 16 . . 2 . . 39 47 Honduras 67 85 68 85 67 84 8 13 1 7 45 60 48 Bolivia 64 86 78 96 50 76 12 29 4 13 39 63 49 Cameroon 65 101 87 42 43 91 2 16 . . 1 19 50 Thailand 83 82 88 85 79 78 13 28 2 5 68 84 51 Philippines 95 105 98 102 93 107 26 56 13 24 72 88 52 Congo, Peoples Rep. 78 156 103 163 53 148 4 69 1 3 16 53 Nicaragua 66 85 65 83 66 88 7 26 1 11 . . 90 54 Papua New Guinea 32 60 59 70 7 49 1 13 . . . . 29 55 El Salvador 80 79 82 80 77 77 13 23 1 8 49 62 56 Nigeria 36 62 46 . . 27 . . 4 13 (.) 1 15 57 Peru 83 112 95 116 71 106 15 50 4 16 61 80 58 Morocco 4] 72 67 90 27 54 5 20 1 4 14 28 59 Mongolia 79 108 79 111 78 105 51 81 8 8 60 Albania 94 . . 102 . . 86 . . 20 . . 5 . . . S 61 Dominican Rep. 98 96 99 95 98 96 7 28 1 10 65 67 62 Colombia 77 124 77 122 77 127 12 43 2 10 63 63 Guatemala 45 64 50 68 39 58 7 15 2 5 32 64 Syrian Arab Rep. 65 89 89 105 39 73 16 50 4 14 30 178 Number Number enrolled in enrolled in Number enrolled in primary school secondary higher education Ad u It as percentage of age group school as as percentage literacy percentage of of population rate Total Male Female age group aged 20-24 (percent) 1960 1978 1960 1978 1960 1978 1960 1978 1960 1977 1960 1976 65 Ivory Coast 46 71 68 88 24 54 2 14 (.) 2 5 20 66 Ecuador 83 108 87 110 79 106 12 46 3 29 68 77 67 Paraguay 98 85 105 87 90 84 11 25 2 8 75 84 68 Tunisia 66 100 88 116 43 83 12 30 5 16 62 69 Korea, Oem. Rep. 113 115 112 70 Jordan 77 102 94 103 59 101 74 1 7 32 70 71 Lebanon 102 96 105 103 99 89 19 46 6 72 Jamaica 92 98 92 97 93 97 45 58 2 82 73 Turkey 75 105 90 115 58 95 14 41 3 8 38 60 74 Malaysia 96 94 108 95 83 92 19 48 1 4 53 60 75 Panama 96 88 98 89 94 86 29 116 5 21 73 76 Cuba 109 122 109 125 109 119 14 51 3 16 77 Korea, Rep. of 94 111 99 112 89 111 27 74 5 11 71 93 78 Algeria 46 99 55 114 37 82 8 29 (.) 4 10 35 79 Mexico 80 116 82 119 77 114 11 39 3 11 65 82 80 Chile 109 118 111 118 107 117 24 52 4 13 84 81 South Africa 89 94 85 15 3 57 82 Brazil 95 88 97 87 93 88 11 24 2 13 61 76 83 Costa Rica 96 107 97 108 95 107 21 46 5 19 90 84 Romania 98 106 101 109 95 103 24 84 5 10 98 85 Uruguay 111 105 111 103 111 108 37 64 8 18 94 86 Iran 41 101 56 121 27 80 12 44 1 5 16 50 87 Portugal 117 119 115 55 4 11 62 70 88 Argentina 98 110 98 110 99 111 23 41 11 29 91 94 89 Yugoslavia 111 99 113 100 108 98 58 82 9 23 77 85 90 Venezuela 100 106 100 106 100 106 21 38 4 21 63 82 91 Trinidad and Tobago 88 99 89 98 87 101 24 39 1 4 93 95 92 Hong Kong 87 115 93 116 79 114 20 57 4 10 70 90 93 Singapore 111 109 121 111 101 107 32 57 6 9 94 Greece 102 104 104 104 101 103 37 79 4 19 81 95 Israel 98 97 99 96 97 97 48 68 10 25 84 96 Spain 110 110 106 110 116 110 23 76 4 22 87 Industrial market economies 114 w 100w 109w 102w 108 w 102w 68w 89w 17 w 37 99 w 97 Ireland 110 104 107 105 112 104 35 92 9 19 98 98 Italy 111 103 112 104 109 103 34 73 7 27 91 98 99 New Zealand 108 108 110 109 106 108 73 82 13 28 99 100 United Kingdom 92 106 92 105 92 106 66 83 9 19 99 101 Finland 97 85 100 86 95 85 74 89 7 20 99 100 102 Austria 105 100 106 100 104 99 50 72 8 21 99 99 103 Japan 103 98 103 98 102 98 74 93 10 32 98 99 104 Australia 103 94 103 94 103 93 51 73 13 26 100 105 Canada 107 101 108 101 105 100 46 89 16 38 99 106 France 144 112 144 113 143 111 46 83 10 26 99 107 Netherlands 105 101 105 100 104 102 58 92 13 28 99 108 United States 118 98 . . . . . 86 97 32 56 98 99 109 Norway 100 100 100 100 100 100 57 90 7 24 . 99 110 Belgium 109 102 111 101 108 102 69 86 9 23 99 111 Germany, Fed. Rep. 133 90 . . . . . 94 6 25 99 112 Denmark 103 103 103 102 103 104 80 10 32 99 113 Sweden 96 99 95 99 96 99 55 73 9 35 99 114 Switzerland 118 86 118 86 118 87 26 55 7 16 99 Capital-surplus oil exporters 48w 97w 7lwllOw 25w 85w 13w 45w 2w 8w 14w 115 Iraq 65 117 94 130 36 103 19 50 2 9 18 116 Saudi Arabia 12 59 22 74 2 44 2 26 (.) 7 3 117 Libya 59 123 92 128 24 119 9 67 7 50 118 Kuwait 117 104 131 110 102 98 37 74 13 47 60 Nonmarket industrial economies 101 w 97 iv 101 a 97 w 101 w 97 w 47w 71w 11w 21w 93w 119 Bulgaria 93 96 94 96 92 95 55 90 11 22 91 . 120 Poland 109 100 110 102 107 99 50 67 9 18 95 98 121 Hungary 101 97 103 96 100 97 46 69 7 12 97 98 122 USSR 100 97 100 97 100 97 49 72 11 22 98 100 123 Czechoslovakia 93 94 93 94 93 95 25 40 11 15 95 . 124 German Dem. Rep. 112 94 111 92 113 95 39 92 16 29 a. Figures in italics are years other than those specified. See the technical notes. 179 Table 24. Defense and Social Expenditure Defense expenditure as percentage of: Central government expenditure Central per capita (1975 dollars) government GNP expenditure Defense Education Health 1972a 1978b 1972a 1978b 1972a 1978b 1972a 1978b 1972a 1978b Low-income countries 3.7 w 4.0 w 19.4 w 16,2 w 6w 7w 3w 4w 2w 2w China and India .. 4.0 w .. 15.9 w 7w .. 4w Other tow-income 3.7 w 3.9 w 19.4 zv 18.9 w 6w 7w 3w 3w 2w 2w 1 Kampuchea, Dem. . . . . . . . . . 2LaoPDR . .. .. 3 Bhutan .. .. .. .. .. .. 4 Bangladesh 0.5 . . 5. 1 . . (.) . . 1 (.) 5 Chad 4.5 . . 24.6 . . 6 . . 3 . . 1 6 Ethiopia 2.0 . . 14.3 . . 2 . . 2 2 1 1 7 Nepal 0.6 0.8 7.1 6.4 1 1 2 (.) 1 8 Somalia 6.2 7.3 23.3 20.1 7 7 2 5 2 2 9 Mali . . 3.3 . . 18.6 . . 4 . . 5 . . 1 10 Burma 6.3 3.7 31,6 26.3 7 5 3 2 1 1 11 Afghanistan . . . . . . . . . . . . . 12 Viet Nam .. .. .. .. .. .. .. 13 Burundi 2.0 2.5 10.3 11.2 2 3 6 6 1 1 14 Upper Volta 1.3 3.2 11.5 21.8 1 4 3 3 1 1 15 India . . 2.8 . . 18.7 . . 4 . . (.) . . (.) 16 Malawi 0.6 2.8 3.2 11.2 1 4 4 4 1 2 17 Rwanda 3.0 1.7 25.6. 12.4 4 2 3 3 1 1 18 Sri Lanka 1.3 0.7 4.1 1.9 4 2 12 8 6 5 19 Benin .. . . .. .. .. , 20 Mozambique . . . . . . 21 Sierra Leone . . 1.7 . 7.8 . . 3 . . 7 . . 3 22 China 4.8 15.1 9 6 23 Haiti .. .. .. .. .. .. .. 24 Pakistan 6.6 5.3 39.9 31.4 10 10 (.) 1 (.) 1 25 Tanzania 2.3 4.0 11.9 14.7 4 7 5 7 2 4 26 Zaire . . . . . . . 27 Niger 0.9 6.1 . . 2 6 28 Guinea , . . 29 Central African Rep. . . . . . . . . , . . . . 30 Madagascar 0.8 . . 3.6 . . 2 . . 5 2 31 Uganda 32 Mauritania 33 Lesotho 34 logo 12 35 ndonesia 36 Sudan 3.5 3.5 23.5 13.5 8 15 4 Middle-income countries 2.9 w 2.8 w 13.6 w 12.1 w 27 w 29w 22w 33 w 9 zv 15 ZL Oil exporters 3.0 w 2.6 w 16.4 w 10.8 w 31 w 22 w 25 w 32w lOw 8w Oil importers 2.8 w 2.9 w 12.6 w 12.6 w 24 w 32w 20w 34w 9w 20 w 37 Kenya 1.3 4.0 6.0 16.0 3 10 11 12 4 5 38 Ghana 1.6 0.8 8.0 5.3 8 4 20 11 6 5 39 Yemen Arab Rep. . . 4.1 . . 30.6 . . 15 5 2 40 Senegal . . , . . . . 41 Angola .. . . .. .. .. , . .. 42 Zimbabwe .. .. .. .. .. .. .. 43 Egypt . . 3.7 . . 8.2 . . 17 . . 24 7 44 Yemen, PDR .. .. .. .. .. 45 Liberia 1.2 . . 4.1 5 . . 20 . . 10 46 Zambia . . . . . . . . . . . . 33 23 13 11 47 Honduras 1.9 . . 12.4 . . 7 . . 13 . . 6 48 Bolivia 1.5 2.0 16.1 16.1 7 10 13 18 4 5 49 Cameroon . . 1.4 . . 8.3 . . 5 . . 11 . . 3 50 Thailand 3.5 3.1 19.5 18.1 11 13 11 15 2 3 51 Philippines 1.5 2.8 10.1 19.0 5 11 7 7 1 3 52 Congo, People's Rep. . . . . . . . . . . , 53 Nicaragua 1.9 . . 12.3 . . 12 . . 16 . . 4 54 Papua New Guinea . . 1.5 . . 4.3 . . 6 . . 26 . . 12 55 El Salvador 0.8 1.0 6.6 6.8 4 5 11 14 6 6 56 Nigeria 5.2 4.0 40.2 17.9 20 20 2 11 2 2 57 Peru 2.5 2.1 14.8 13.1 23 18 35 23 10 8 58 Morocco 2.8 6.8 12.3 16.3 13 41 21 34 5 7 59 Mongolia . . . . . 60 Albania . . . . . . . . . . . . . 61 Dominican Rep. 1.5 8.5 11 18 15 . 62 Colombia .. . . .. .. . . .. .. .. . . 63 Guatemala 1.1 1.2 11.0 11.0 3 8 5 9 2 5 64 Syrian Arab Rep. 10.9 15.3 37.2 34.9 64 121 19 22 2 3 180 Defense expenditure as percentage of: Central government expenditure Central per capita (1975 dollars) government GNP expenditure Defense Education Health 1972 1978b 1972a 1978b 1972 1978b 1972a 1978b 1972a 1978b 65 Ivory Coast .. . .. . .. .. .. 66 Ecuador 2.0 2.2 16.9 19.2 11 15 20 20 3 6 67 Paraguay 1.8 1.3 13.8 11.3 9 9 8 11 2 2 68 Tunisia 1.1 1.5 4.8 4.3 7 13 46 62 11 21 69 Korea, Dem, Rep. . . . . . . . . . . 70 Jordan .. .. .. .. .. .. 71 Lebanon . . . . . . . . . . . 72 Jamaica . . 1.0 . . 2.6 . . 12 . . 83 . . 35 73 Turkey 3.4 3.1 15.4 12.1 27 16 32 27 6 3 74 Malaysia 5.1 4.0 18.5 14.7 33 35 42 51 12 15 75 Panama . . . . 64 . . 47 76 Cuba .. .. .. .. .. .. .. 77 Korea, Rep. of 4.9 6.3 25.8 38.0 22 49 14 21 1 2 78 Algeria .. .. . . . . .. .. .. . 79 Mexico 0.6 0.6 4.9 3.4 8 8 27 47 8 9 80 Chile 2.6 4.4 6.1 12.0 4 37 9 40 5 20 81 South Africa .. .. .. .. .. .. .. . 82 Brazil 1.4 1.1 8.3 5.8 13 14 11 14 10 20 83 Costa Rica 0.5 0.] 2.6 2.7 5 8 48 68 6 10 84 Romania . . . . . . . . . . . . . 85 Uruguay 1.4 2.5 5.6 10.5 16 17 28 15 5 8 86 Iran 7.4 24.1 104 45 16 87 Portugal .. .. .. .. .. .. .. 88 Argentina 1.5 2.5 9.0 11.9 22 36 29 25 8 6 89 Yugoslavia 4.1 4.1 20.5 19.0 54 72 . . . . 66 98 90 Venezuela 2.1 2.3 9.7 7.8 41 55 73 101 27 35 91 Trinidad and Tobago 92 Hong Kong .. .. .. .. .. .. .. 93 Singapore 6.0 5.4 35.3 26.8 126 164 56 88 28 52 94 Greece 7.8 5.7 14.6 19.0 90 145 54 77 44 73 95 Israel 17.6 23.4 39.8 35.8 620 861 141 222 55 109 96 Spain 1.3 1.0 6.5 4.2 34 32 43 66 5 5 Industrial market economies 5.1 w 2.9 w 21.6 w 13.4 or 301 w 281 w 80 w 120w 152 w 229 u 97 Ireland .. .. .. .. .. 98 Italy 2.0 . . 6.3 . . 70 . . 178 . . 150 99 New Zealand 1.5 1.6 5.8 4.4 69 70 215 231 195 241 100 United Kingdom 5.5 . . 16.7 . . 21] . . 34 . . 158 101 Finland 1.5 1.4 6.1 4.7 80 83 203 272 140 196 102 Austria 1.0 1.2 3.0 3.1 47 67 160 215 156 272 103 Japan .. .. . . .. .. .. .. .. 104 Australia 2.8 3.0 14.5 9.4 188 175 55 171 108 193 105 Canada 1.8 8.0 135 75 129 106 France 2.6 7.0 . . 181 . . 251 . . 375 107 Netherlands . . 3.4 . . 6.4 . . 223 . . 520 . . 19 108 United States 6.3 3.1 32.2 21.2 453 374 45 52 120 179 109 Norway 3.4 3.3 9.4 8.1 201 236 206 264 255 319 110 Belgium 2.6 2.9 6.6 5.8 157 202 364 514 34 63 111 Germany, Fed. Rep. 3.0 2.8 12.4 9.8 200 216 24 21 281 433 112 Denmark 2.3 2.5 7.0 6.5 169 200 377 307 231 50 113 Sweden 3.6 3.3 12.2 8.0 283 280 335 364 81 86 114 Switzerland 2.0 2.0 15.1 10.0 184 182 51 68 122 197 Capital-surplus oil exporters 115 Iraq 116 Saudi Arabia 117 Libya 118 Kuwait 1 8 11.2 26 Nonmarket industrial economies 119 Bulgaria 120 Poland 121 Hungary 122 USSR 123 Czechoslovakia 124 German Dem. Rep. a. Figures in italics are for 1973, not 1972. b. Figures in italics are for 1977. not 978. 181 Table 25. Income Distribution Percentage share of household income, by percentile groups of householdsa Lowest Second Third Fourth Highest Highest Year 20 percent quintile quintile quintile 20 percent 10 percent Low-income countries China and India Other low-income 1 Kampuchea, Oem. 2 Lao PDR 3 Bhutan 4 Bangladesh 5 Chad 6 Ethiopia 7 Nepal 1976-77 11.. 1 59.2 46.5 8 Somalia 9 Mali 10 Burma 11 Afghanistan . . . . S 12 Viet Nam . 13 Burundi . . . 0 14 Upper Volta . . . . 15 India 1975-36 7.0 9.2 13.9 20.5 49.4 33.6 16 Malawi 1967-68 10.4 11.1 13.1 14.8 50.6 40.1 17 Rwanda . . . . 0 18 Sri Lanka 1969-70 7.5 11.7 15.7 21.7 43.4 28.2 19 Benin 20 Mozambique . . 21 Sierra Leone 22 China 23 Haiti 24 Pakistan 25 Tanzania 1969 5.8 10.2 13.9 19.7 50.4 35.6 26 Zaire 27 Niger 28 Guinea 29 Central African Rep. 30 Madagascar 31 Uganda 32 Mauritania 33 Lesbtho 34 Togo 35 Indonesia 1976 6.6 7.8 12.6 23.6 49.4 34.0 36 Sudan Middle-income countries Oil exporters Oil importers 37 Kenya 38 Ghana 39 Yemen Arab Rep. 40 Senegal 41 Angola 42 Zimbabwe 43 Egypt 44 Yemen, PDR 45 Liberia 46 Zambia 47 Honduras 1967 2.3 5.0 8.0 16.9 67.8 50.0 48 Bolivia 49 Cameroon 50 Thailand 51 Philippines 1930-71 5.2 9.o 12.8 19.0 54.0 38.5 52 Congo, Peoples Rep. 53 Nicaragua 54 Papua New Guinea 55 El Salvador 56 Nigeria 57 Peru 1972 1.9 5.1 11.0 21.0 61.0 42.9 58 Morocco 59 Mongolia 60 Albania 61 Dominican Rep. 62 Colombia 63 Guatemala 64 Syrian Arab Rep. 182 Percentage share ot household income, by percentile groups of householdsa Lowest Second Third Fourth Highest Highest Year 20 percent quintile quintile quintile 20 percent 10 percent 65 Ivory Coast 66 Ecuador 67 Paraguay 68 Tunisia 69 Korea, Dem. Rep. 70 Jordan 71 Lebanon 72 Jamaica 73 Turkey 1973 3.4 . a 1 a. a 1 a. a 56.5 40.7 74 Malaysia 1970 3.3 7,3 12.2 20.7 56.6 39.6 75 Panama 76 Cuba 77 Korea, Rep. of 1976 5 11.2 15.4 22.4 45.3 27.5 78 Algeria 79 Mexico 1977 7Ô 1 a. a 20.4 57,7 40.6 80 Chile 1968 4.4 9.0 13.8 21.4 51.4 34.8 81 South Africa 82 Brazil 1972 . a a. a a. 11. ó 66.6 50.6 83 Costa Rica 1971 3.3 8.7 13.3 19.9 54.8 39.5 84 Romania 85 Uruguay 86 Iran 87 Portugal 88 Argentina 1970 4 a. 141 21.5 50.3 35.2 89 Yugoslavia 1978 6.6 12.1 18.7 23.9 38.7 22.9 90 Venezuela 1970 3.0 7.3 12.9 22.8 54.0 35.7 91 Trinidad and Tobago 1975-76 4.2 9.1 13.9 22.8 50.0 31.8 92 Hong Kong 93 Singapore 94 Greece 95 Israel 96 Spain 1974 6. a 11.8 16.9 23.1 42.2 26.7 Industrial market economies 97 Ireland . . . . . . . . . . 98 Italy 1969 5.1 10.5 16.2 21.7 46.5 30.9 99 New Zealand . . . . . . . . . . . 100 United Kingdom 1977-78 7.4 11.7 17.0 24.7 39.5 23.3 101 Finland . . . . . . 102 Austria . . . . . 103 Japan 1969 7.9 13.1 16.8 21.2 41. 27.2 104 Australia 1966-67 6.6 13.5 17.8 23.4 38.8 23.7 105 Canada 1969 5.0 11.8 17.9 24.3 41.0 25.1 106 France 1970 4.3 9.8 16.3 22.7 46.9 30.4 107 Netherlands 1975 8.5 13.6 17.8 23.0 37.1 22.5 108 United States 1972 4.5 10.7 17.3 24.7 42.8 26.6 109 Norway 1970 6.3 12.9 18.8 24.7 37,3 22.2 110 Belgium . . . . . 111 Germany, Fed. Rep. 1973 6.5 10.3 15.0 22.0 46.2 30.3 112 Denmark . . . . . 113 Sweden 1972 6.6 13.1 18.5 24.8 37. ó 21.3 114 Switzerland . . Capital-surplus oil exporters 115 Iraq 116 Saudi Arabia 117 Libya 118 Kuwait Nonmarket industrial economies 119 Bulgaria 120 Poland 121 Hungary 122 USSR 123 Czechoslovakia 124 German Dem. Rep. a. These estimates should be treated with caution. See the technical notes. 183 the period, the value of GDP in The accompanying table shows Technical Notes current market prices by the basic indicators for 31 countries value of GDP in constant market that have a population of less Table 1. Basic Indicators prices, both in national currency. than a million and are members This measure of inflation has lim- of the United Nations, the World The estimates of population for itations, especially for the oil-pro- Bank or both. mid-1979 are primarily from the ducing countries in the light of UN Population Division. In some sharp increases in oil prices. cases the UN population data The adult literacy rate is the per- were adjusted by using more Tables 2 and 3. Growth and centage of persons aged 15 and Structure of Production recent data from the World Bank over who can read and write. and the US Bureau of the Census. These rates are based primarily Most of the definitions used are The data on area are from the on information from the UN Edu- those of the UN System of National FAO Production Yearbook, 1979. cational, Scientific and Cultural Accounts. Gross national product (GNP) Organization (UNESCO), supple- Gross domestic product (GDP) measures the total domestic and mented by World Bank data. For measures the total final output of foreign output claimed by resi- some countries the estimates are goods and services produced by dents of a country. It comprises for years other than, but gener- an economythat is, within a gross domestic product (see the ally not more than two years dis- country's territory by residents technical notes for Table 2) and tant from, those specified. Thus and nonresidents, regardless of factor incomes (such as invest- the series are not strictly com- its allocation to domestic and for- ment receipts and workers' remit- parable for all countries. eign claims It is calculated with- tances) accruing to residents from Life expectancy at birth indicates out making deductions for abroad, less the income earned in the number of years newborn depreciation. For most countries, the domestic economy accruing children would live if subject to GDP by industrial origin is mea- to persons abroad. It is calculated the mortality risks prevailing for sured at factor cost, but for some without making deductions for the cross-section of population at countries without complete depreciation. For some countries the time of their birth. Data are national accounts series at factor the estimates of GNP are adjusted from the UN Population Division, cost, market price series were from data on net material product. supplemented by World Bank used. GDP at factor cost is equal The GNP per capita figures were estimates. to GDP at market prices, less indi- calculated according to the World The index of food production per rect taxes net of subsidies. Bank Atlas method: GNP in capita shows the average annual The agricultural sector comprises national currency units was quantity of food produced per agriculture, forestry, hunting and expressed first in weighted aver- capita in 1977-79 in relation to fishing. The industrial sector age prices for the base period that in 1969-71. The estimates comprises mining, manufacturing, 1977-79, converted into dollars at were derived from those of the construction, and electricity, the GNP-weighted average Food and Agriculture Organiza. water and gas. All other branches exchange rate for this period, and tion (FAO), which are calculated of economic activity are cate- adjusted for US inflation. The by dividing indices of the quan- gorized as services. resulting estimate of GNP was tity of food production by indices National accounts series in then divided by the population in of total population. Food is con- domestic currency units were mid-1979. This method reduces sidered to comprise cereals, used to compute the indicators in the effect of temporary under- starchy roots, sugar cane, sugar these tables. The growth rates in valuation or overvaluation of a beet, pulses, edible oils, nuts, Table 2 were calculated from con- currency and generally assures fruits, vegetables, livestock and stant price series, the shares of greater comparability of the esti- livestock products. Quantities of GDP in Table 3 from current price mates of GNP per capita across food prodtiction are measured series. countries. net of animal feed, seeds for use The average growth rates for The average annual rate of infla- in agriculture and food lost in the country groups in Table 2 are tion was calculated from the processing and distribution. weighted by country GDP in 1970 "implicit gross domestic product The country-group averages in in dollars. The average sectoral (GDP) deflator," which is calcu- this table are weighted by coun- shares in Table 3 are weighted by lated by dividing, for each year of try population. country GDP in current dollars. 184 Average index include merchandise, freight, Area GNP per Life expectancy of food production insurance, travel and other non- UN/World Bank members Population (thousands capita at birth per capita factor services. The value of factor with a population of less than I million (millions) Mid-1979 of square kilometers) (dollars) 1979 (years) 1979 (1969-71 100) 1977-79 services, such as investment receipts and workers' remittances Guinea-Bissau 0.8 36 170 42 94 Maldives 0.2 (.) 200 47 from abroad, is excluded. Comoros 0.4 2 220 47 The resource balance is the dif- Gambia, The 0.6 11 250 42 77 ference between exports and Cape Verde 0.3 4 260 61 imports of goods and nonfactor Equatorial Guinea 0.4 28 . . 47 services. Western Samoa 0.2 3 68 National accounts series in Solomon Islands 0.2 28 . . 124 Dominica 0.1 1 400 domestic currency units were Djibouti 0.3 22 420 45 used to compute the indicators in Sao Tome and Principe 0.1 1 450 these tables. The growth rates in Guyana 0.8 215 580 68 97 Table 4 were calculated from con- Grenada 0.1 (.) 620 69 stant price series, the shares of Swaziland 0.5 17 650 47 109 GDP in Table 5 from current price Botswana 0.8 600 720 49 89 series. St. Lucia 0.1 1 780 . The country-group averages in Mauritius 0.9 2 1,030 65 100 Seychelles 0.1 1,400 Table 5 are weighted by country (.) Fiji 0.6 18 1,680 72 124 GDP in current dollars. Barbados 0.2 (.) 2,440 71 81 Suriname 0.4 163 2,590 68 148 Table 6. Industrialization Malta 0.3 (.) 2,610 72 126 Bahamas 0.2 14 2,750 69 The percentage distribution of Oman 0.9 300 2,970 48 value added among manufacturing Cyprus 0.6 9 3,110 73 94 industries was calculated from Gabon 0.6 268 3,280 45 94 Bahrain 0.4 1 5,270 67 data obtained from the UN Indus- Iceland 0.2 103 10,400 75 115 trial Development Organization Luxembourg 0.4 3 12,670 72 104 (UNIDO), with the base values United Arab Emirates 0.8 84 15,590 62 expressed in 1975 dollars. Qatar 0.2 11 16,670 58 The classification of manufac- turing industries is in accord with the UN International Standard Tables 4 and 5. Growth of dwellings. Industrial Classification of All Consumption and Investment; Gross domestic investment Economic Activities (ISIC). Food Structure of Demand consists of the outlays for addi- and agriculture comprise ISIC tions to the fixed assets of the Major Groups 311, 313 and 314; GDP is defined in the technical economy, plus the net value of Textiles and clothing 321-24; notes for Table 2. inventory changes. Machinery and transport equipment Public consumption (or general Gross domestic saving shows the 382-84; and Chemicals 351 and government consumption) in- amount of gross domestic invest- 352. Other manufacturing cludes all current expenditure ment financed from domestic comprises ISIC Major Division 3, for purchases of goods and ser- output. Comprising public and less all of the above. vices by all levels of government. private saving, it is the difference The figures for value added in Capital expenditure on national between gross domestic invest- manufacturing are from the World defense and security is regarded ment and the deficit on the current Bank's national accounts series in as consumption expenditure. account of goods and nonfactor national currencies, converted to Private consumption is the mar- services, excluding net current 1975 dollars. ket value of all goods and services transfers. To calculate gross manufacturing purchased or received as income Exports of goods and nonfactor output per capita, ratios of gross in kind by households and non- services represent the value of all output to value added in man- profit institutions. It includes goods and nonfactor services sold ufacturing, derived from various imputed rent for owner-occupied to the rest of the world; they issues of the UN Yearbook of Indus- 185 trial Statistics, were applied to the supplemented by statistics from national Trade Statistics. World Bank's data on value added the UN Conference on Trade and Merchandise exports and imports in manufacturing. Per capita val- Development (UNCTAD), Inter- are defined in the technical notes ues were then calculated by using national Monetary Fund (IMF), for Table 8. mid-year estimates of country Direction of Trade, International In the categorization of exports population. Financial Statistics and in a few in Table 9, fuels, minerals and met- cases from World Bank country als are the commodities in SITC Table 7. Commercial Energy documentation. (Revised) Section 3, Divisions 27 Merchandise exports and imports and 28, and the nonferrous met- All data on energy are from UN cover, with some exceptions, all als of Division 68. Other primary sources. They refer to commercial international changes in owner- commodities comprise SITC Sec- forms of primary energy: coal and ship of merchandise passing tions 0, 1, 2 and 4 (food and live lignite, petroleum, natural gas across the customs borders of the animals, beverages and tobacco, and natural gas liquids, and reporting countries. Exports are inedible crude materials, oils, fats hydroelectricity and nuclear valued f.o.b. (free on board), and waxes) less Divisions 27 and powerall converted into coal imports c.i.f. (cost, insurance and 28 (minerals, crude fertilizers and equivalents. The use of firewood freight), unless otherwise specified metalliferous ores). Textiles and and other traditional fuels, though in the foregoing sources. These clothing represent SITC Divisions substantial in some developing values are in current dollars. 65 and 84 (textiles, yarns, fabrics countries, is not taken into The growth rates of merchandise and clothing). Machinery and account because reliable and com- exports and imports are in real transport equipment are the com- prehensive data are not available. terms and calculated from quan- modities in SITC Section 7. Other The country-group averages of tum (volume) indices of exports manufactures, calculated as the growth rates of energy production and imports. For the majority of residual from the total value of are weighted by volumes of coun- developing countries these manufactured exports, represent try production in 1974; those of indices are from the UNCTAD SITC Sections 5 to 9 less Section 7 growth rates of energy consump- Handbook of International Trade and and Divisions 65, 68 and 84. tion, by volumes of country con- Development Statistics and supple- In the categorization of imports sumption in 1974; those of energy mentary data that show revisions. in Table 10, food commodities are consumption per Ca pita, by country For industrialized countries the those in SITC (Revised) Sections population. indices are from the UN Yearbook 0, 1 and 4 and in Division 22 (food Energy imports refer to the dol- of International Trade Statistics and and live animals, beverages and lar value of energy imports UN Monthly Bulletin of Statistics. tobacco, oils and fats). Fuels are Revised Standard International The terms of trade, or the "net the commodities in SITC Section Trade Classification (SITC) Sec- barter terms of trade," are calcu- 3 (mineral fuels, lubricants and tion 3and are expressed as a lated as the ratio of a country's related materials). Other primary percentage of earnings from mer- index of export unit values to that commodities comprise SITC Sec- chandise exports. The country- of import unit values. The terms- tion 2 (crude materials excluding group averages are weighted by of-trade index numbers shown fuels), less Division 22 (oilseeds country merchandise exports in for 1960 and 1979, with 1975=100, and nuts) plus Division 68 (non- current dollars. thus indicate changes in export ferrous metals). Machinery and Because data on energy imports prices in relation to import prices. transport equipment are the com- do not permit a distinction The unit value indices are from modities in SITC Section 7. Other between petroleum imports for the same sources cited above for manufactures, calculated as the fuel and for use in the petro- the growth rates of exports and residual from the total value of chemicals industry, these percent- imports. manufactured imports, represent ages may be overestimates of the SITC Sections 5 to 9 less Section 7 dependence on imported energy. Tables 9 and 10. Structure of and Division 68. Merchandise Trade The country-group averages in Table 8. Merchandise Trade Table 9 are weighted by country The shares in these tables are merchandise exports in current The statistics on merchandise derived from trade values in cur- dollars; those in Table 10, by trade are from UN publications rent dollars reported in UN trade country merchandise imports in and the UN trade data system, tapes and the UN Yearbook of Inter- current dollars. 186 Table 11. Destination of interest payments on external public medium- and long-term loans are Merchandise Exports and publicly guaranteed debt, which from the World Bank Debt Report- are shown separately. These ing System. The net inflow is the Merchandise exports are defined in interest payments represent gross inflow less the repayment of the technical notes for Table 8. All those on the disbursed portion of principal. trade shares in this table are outstanding public and publicly Net direct private investment is based on statistics on the value of guaranteed debt plus commit- the net amount invested or rein- trade in current dollars in IMF, ment charges on undisbursed vested by nonresidents of the Direction of Trade. Unallocated debt. The current account esti- country in enterprises in which exports are distributed among the mates are from IMF data files; they or other nonresidents exer- country groups in proportion to estimates of interest payments cise significant managerial con- their respective shares of alloca- are from the World Bank Debt trol. These net figures also take ble trade. Industrial market econo- Reporting System. into account the value of direct mies also include Gibraltar, Ice- Debt service is the sum of inter- investment abroad by residents. land and Luxembourg; capital- est payments and repayments of IMF data files were used in com- surplus oil exporters also include principal on external public and piling these estimates, Oman, Qatar and United Arab publicly guaranteed debt. Debt Emirates. service data are from the World Table 15. External Public Debt The country-group averages Bank Debt Reporting System. and International Reserves are weighted by country merchan- The ratio of debt service to dise exports in current dollars. exports of goods and services is External public debt outstanding rep- one of several rules of thumb resents the amount of public and Table 12. Trade in Manufactured commonly used to assess the abil- publicly guaranteed loans that Goods ity to service debt. The debt ser- have been disbursed, net of can- vice ratios in the table do not celed loan commitments and The data in this table are from the cover unguaranteed private debt, repayments of principal. The data United Nations and are among which for some countries is sub- refer to the end of the year indi- those used to compute special stantial; the debt contracted for cated and are from the World Bank Table B in the UN Yearbook of purchases of military equipment Debt Reporting System. In es- International Trade Statistics. Man- is also excluded because it usually timating external public debt as a ufactured goods are the com- is not reported. The average percentage of GNP, GNP was con- modities in SITC (Revised) Sec- ratios of debt service to GNP for verted from national currencies to tions 5 through 9 (chemicals and the country groups are weighted dollars at the average official related products, manufactured by country GNP in current dol- exchange rate for the year in ques- articles, machinery and transport lars. The average ratios of debt tion. The country-group averages equipment) excluding Division 68 service to exports of goods and are weighted by country GNP in (nonferrous metals). services are weighted by country current dollars. The country groups are the exports of goods and services in Gross international reserves com- same as those in Table 11. The current dollars. prise a country's holdings of gold, country-group averages are The World Bank Debt Report- special drawing rights (SDRs), the weighted by country manufac- ing System is concerned solely reserve position of IMF members tured exports in current dollars. with developing countries and in the Fund and holdings of for- does not collect data on external eign exchange under the control of Table 13. Balance of Payments debt for other groups of coun- monetary authorities. The gold and Debt Service Ratios tries. Nor are comparable data for component of these reserves is those countries available from valued throughout at year-end The current account balance is the other sources. London prices: that is, $37.37 an difference between (i) exports of ounce in 1970 and $512.00 an goods and services plus inflows Table 14. Flow of ounce in 1979. The data for hold- of unrequited official and private External Capital ings of international reserves are transfers and (ii) imports of goods from IMF data files. The reserve and services plus unrequited Data on the gross inflow and repay- levels for 1970 and 1979 refer to the transfers to the rest of the world. ment of principal (amortization) of end of the year indicated and are Excluded from this figure are all public and publicly guaranteed in current dollars. The reserve 187 holdings at the end of 1979 are also countries were converted into 1978 tions until the population became expressed in the number of prices using the dollar GNP defla- stationary. The base-year estimates months of imports of goods and tor. This deflator is based on price are from UN, World Population services they could pay for, with increases in OECD countries (ex- Trends and Prospects by Country, imports at the average level for cluding Greece, Portugal, Spain 1950-2025, and from the World 1978 or 1979. The country-group and Turkey) measured in dollars. It Bank, the Population Council, the averages are weighted by country takes into account the parity US Bureau of the Census, and imports of goods and services in changes between the dollar and recent national censuses. current dollars. national currencies. For example, The net reproduction rate (NRR) in- when the dollar depreciates, price dicates the number of daughters Table 16. Official Development increases measured in national cur- that a newborn girl will bear during Assistance from OECD and rencies have to be adjusted upward her lifetime, assuming fixed age- OPEC Members by the amount of the depreciation specific fertility rates and a fixed set to obtain price increases in dollars. of mortality rates. Official development assistance (ODA) The projections are sensitive to The NRR thus measures the consists of net disbursements of exchange rates, which affect the extent to which a cohort of new- loans and grants made at conces- dollar values of ODA and GNP born girls will reproduce them- sional financial terms by official and the relative weights of coun- selves under given schedules of fer- agencies of the members of the De- tries in the total. No attempt has tility and mortality. An NRR of 1 velopment Assistance Committee been made to project changes in indicates that fertility is at replace- (DAC) of the Organisation for Eco- exchange rates. ment level: at this rate child-bearing nomic Co-operation and Develop- The table, in addition to show- women, on the average, bear only ment (OECD) and members of the ing totals for OPEC, shows totals enough daughters to replace them- Organization of Petroleum Export- for the Organization of Arab selves in the population. A popula- ing Countries (OPEC) with the ob- Petroleum Exporting Countries tion continues to grow after jective of promoting economic de- (OAPEC). The donor members of replacement-level fertility has been velopment and welfare. It includes OAPEC are Algeria, Iraq, Kuwait, reached because its past higher the value of technical cooperation Libya, Qatar, Saudi Arabia and birth rates will have produced an and assistance. United Arab Emirates. ODA data age distribution with a relatively Amounts shown are net disburse- for OPEC and OAPEC were also high proportion of women in, or ments to developing countries and obtained from the OECD. still to enter, the reproductive ages. multilateral institutions. The dis- The time taken for a country's bursements to multilateral institu- Table 17. Population Growth, population to become stationary tions are now reported for all DAC Past and Projected, and after reaching replacement-level members on the basis of the date of Hypothetical Stationary fertility thus depends on its age struc- issue of notes; some DAC members Population ture and previous fertility patterns. previously reported on the basis of A stationary population is one in the date of encashment. Net bilateral The growth rates of population are which age- and sex-specific mor- flows to low-income countries exclude period averages calculated from tality rates have not changed over a unallocated bilateral flows and all mid-year country populations. long period, while age-specific fer- disbursements to multilateral insti- The country-group averages are tility rates have simultaneously tutions. weighted by country population remained at replacement level Figures for 1960 to 1980 were in 1970. (NRR= 1). In such a population, supplied by the OECD. All others The projections of population for the birth rate is constant and equal are projections by World Bank staff, 1980 and 2000, and to the year in to the death rate, the age structure based on OECD and World Bank which it will eventually become also is constant and the growth rate estimates of GNP growth, informa- stationary, were made for each is zero. tion on budget appropriations for country separately. Starting with For all the projections, it was aid, and statements on aid policy information on total population, assumed that international migra- by governments. They are projec- fertility rates and mortality rates in tion would have no effect. tions based on present plans rather the base year 1979, these param- The estimates of the hypotheti- than predictions of what will occur. eters were projected to 1980 and cal size of the stationary popula- The nominal values shown in the thereafter for five-year intervals on tion, the assumed year of reaching summary for ODA from OECD the basis of generalized assump- replacement-level fertility and the 188 year of reaching a stationary popu- vol. 32, no. 3 (Washington, D.C.: tion estimates may be inappropri- lation are speculative. They should Population Reference Bureau, ate for some countries in which not be regarded as predictions. They August 1977); and Office of Popu- there have been important are included to provide a sum- lation, Family Planning Service Sta- changes in levels of unemploy- mary indication of the long-run tistics, Annual Report 1976 (Wash- ment and underemployment, in implications of recent trends on ington, D.C.: US Agency for Inter- international and internal migra- the basis of highly stylized national Development). The data tion or in both. The labor force assumptions. A fuller description refer to a variety of years, gener- projections for 1980-2000 should of the methods and assumptions ally not more than two years dis- thus be treated with caution. used to calculate the estimates is tant from those specified. available from the Population and All country-group averages are Table 20. Urbanization Human Resources Division of the weighted by country population. World Bank. The data on urban population as a Table 19. Labor Force percentage of total population are Table 18. Demographic and from the UN (Patterns of Urban and Fertility-related Indicators The population of working age refers Rural Population Growth, Population to the population aged 15-64. The Studies, no. 68, 1980), supple- The crude birth and death rates indi- estimates for 1979 are based on the mented by data from the World cate the number of live births and population estimates in Table 1; Bank and from various issues of deaths per thousand population in those for 1960 are from the UN the UN Demographic Yearbook. a year. They are from the same Population Division. The country- The growth rates of urban popula- sources mentioned in the techni- group averages are weighted by tion were calculated from the cal notes for Table 17. Percentage country population. World Bank's population esti- changes are computed from The labor force comprises eco- mates; the estimates of urban unrounded data. nomically active persons, includ- population shares were calculated The total fertility rate represents ing the armed forces and the from the sources cited above. the number of children that would unemployed, but excluding Data on urban agglomeration be born per woman, if she were to housewives, students and eco- are also from the United Nations. live to the end of her child-bearing nomically inactive groups. Agri- Because the estimates in this years and bear children at each age culture, industry and services are table are based on different in accord with prevailing age-spe- defined in the same manner as in national definitions of what is cific fertility rates. The rates given Table 2. The estimates of the sec- "urban," cross-country compari- are from the same sources men- toral distribution of the labor force sons should be interpreted with tioned in the technical notes for in 1960 are from International caution. Table 17. Labour Office (ILO), Labour Force The country-group averages for The percentage of women in the Estimates and Projections, urban population as a percentage reproductive age group refers to 1 950-2000; most of those for 1979 of total population are weighted women of child-bearing age are geometric extrapolations of by country population; the other (15-44 years) as a percentage of ILO estimates for 1960 and 1970 in country-group averages in this the total female population. The the same source. The country- table are weighted by country estimates were derived from the group averages are weighted by urban population. population estimates in Table 1. country labor force. The percentage of married women The labor force growth rates were Table 21. Indicators Related to using contraceptives refers only to derived from the Bank's popula- Life Expectancy married women of child-bearing tion projections and ILO data on age (15-44 years). These data are activity rates, again from the Life expectancy at birth is defined in mainly derived from Dorothy source cited above. The country- the technical notes for Table 1. Nortman and Ellen Hofstatter, group averages for 1960-70 and The infant mortality rate is the Population and Family Planning Pro- 1970-80 are weighted by country number of infants who die before grams: A Factbook (New York: Pop- labor force in 1970; those for reaching 1 year of age, per thou- ulation Council, various issues); 1980-2000, by projections of coun- sand live births in a given year. Dorothy Nortman, "Changing try labor force in 1980. The data are from a variety of Contraceptive Patterns: A Global The application of ILO activity sources, including different Perspective,"Population Bulletin, rates to the Bank's latest popula- issues of the UN Demographic 189 Yearbook and the US Bureau of the with access to safe water, estimated given. For countries with univer- Census publication, World Popula- by the WHO, is the proportion of sal primary education, the gross tion: 1977; they refer to a variety of persons with reasonable access to enrollment ratios may exceed 100 years, generally not more than safe water, which is defined as percent because some pupils may two years distant from those including treated surface water be below or above the official specified. and such untreated but uncon- primary-school age. The child death rate is the num- taminated water as that from The data on number enrolled in ber of deaths of children aged 1-4 boreholes, springs and sanitary secondary school were calculated in per thousand children in the wells. the same manner, with second- same age group in a given year. The daily calorie supply per capita ary-school age generally 'consid- For countries with reliable death was calculated by dividing the ered to be 12-17 years. registration, these rates are from calorie equivalent of the food sup- The data on number enrolled different issues of the UN plies in a country by its popula- in higher education are from Demographic Yearbook; they refer to tion. Food supplies comprise UNESCO. a variety of years, generally not domestic production, imports The adult literacy rate is defined more than two years distant from less exports, and changes in in the technical notes for Table 1. those specified. For other coun- stocks; they exclude animal feed, The country-group averages in tries, the rates were derived from seeds for use in agriculture and this table are weighted by coun- the appropriate Coale-Demeny food lost in processing and dis- try population. Model life tables to correspond to tribution. The daily calorie require- the expectation of life at birth for ment per capita refers to the calo- 1960 and 1979; see Ansley J. Coale Table 24. Defense and Social ries needed to sustain a person at Expenditure and Paul Demeny, Regional Model normal levels of activity and Life Tables and Stable Populations health, taking into account age All data on the central govern- (Princeton, N.J.: Princeton Uni- and sex distributions, average ment transactions are from the versity Press, 1966). body weights and environmental IMF Government Finance Statistics The country-group averages in temperatures. Both sets of esti- Yearbook and IMF data files. These this table are weighted by coun- mates are from the Food and transactions include current and try population. Agriculture Organization. capital (development) expendi- The country-group averages in ture. The inadequate statistical Table 22. Health-related this table are weighted by coun- coverage of state, provincial and Indicators try population. local governments and the non- availability of data for these lower The estimates of population per Table 23. Education levels of government has dictated physician and nursing person were the use of only central govern- derived from World Health The data in this table refer to a ment data. This may seriously Organization (WHO) data, some variety of years, generally not understate or distort the statistical of which have been revised to more than two years distant from portrayal of the allocation of reflect new information supplied those specified, and are mostly resources for various purposes, by reporting countries. They also from UNESCO. especially in large countries take into account revised esti- The data on number enrolled in where lower levels of government mates of population, which are primary school refer to estimates of have considerable autonomy and shown in Table 1. Nursing per- total, male and female enrollment are responsible for a large num- sons include graduate, practical of students of all ages in primary ber of social functions. and assistant nurses. Because school; they are expressed as per- Central government expenditure country definitions of nursing centages of the total, male, or covers that by all government personnel varyand because the female populations of primary- departments, offices, establish- data shown are for a variety of school age to give "gross primary ments and other bodies that are years, generally not more than enrollment ratios." Although pri- agencies or instruments of the two years distant from those mary-school age is generally con- central authority of a country. It specifiedthe data for these two sidered to be 6-11 years, the dif- does riot necessarily comprise all indicators are not strictly com- ferences in country practices in public expenditure. parable across countries. the ages and duration of school- Defense expenditure covers all The percentage of total population ing are reflected in the ratios expenditure, whether by defense 190 or other departments, for the expenditure. Great caution for the other industrial market maintenance of military forces, should therefore be exercised in economies are from Malcolm including the purchase of military using the data for cross-country Sawyer, Income Distribution in supplies and equipment, con- comparisons. OECD Countries (OECD Occa- struction, recruiting and training. The country-group averages for sional Studies, July 1976); they Also falling under this category is defense expenditure as a percent- refer to posttax income and con- expenditure for strengthening the age of GNP are weighted by ceptually are roughly comparable public services to meet wartime country GNP in current dollars; with the distributions for emergencies, for training civil those for defense expenditure as developing countries. defense personnel and for foreign a percentage of central govern- Because the collection of data thilitary aid and contributions to ment expenditure, by country on income distribution has not international military organiza- central government expenditure been systematically organized tions and alliances. in current dollars. The other and integrated with the official Education expenditure com- country-group averages in this statistical system in many coun- prises expenditure for the provi- table are weighted by country tries, estimates were typically sion, management, inspection population. derived from surveys designed and support of preprimary, pri- for other purposes, most often mary and secondary schools, of Table 25. Income Distribution consumer expenditure surveys, universities and colleges and of which also collect some informa- vocational, technical and other The data in this table refer to the tion on income. These surveys training institutions by central distribution of total disposable use a variety of income concepts governments. Also included is household income accruing to and sample designs. Further- expenditure on the general percentile groups of households more, the coverage of many of administration and regulation of ranked by total household these surveys is too limited to the education system, on income. The distributions cover provide reliable nationwide esti- research into its objectives, rural and urban areas and refer to mates of income distribution. organization, administration and different years between 1966 and Thus, although the estimates method, and on such subsidiary 1978. shown are considered the best services as transport, school The estimates for Latin Amer- available, they do not avoid all meals and medical and dental ican countries other than Mexico these problems and should be services in schools. come from the preliminary interpreted with extreme caution. Health expenditure covers pub- results of a joint project of the The scope of the indicator is lic expenditure on hospitals, World Bank and the UN Eco- similarly limited. Because house- medical and dental centers, and nomic Commission for Latin holds vary in size, a distribution clinics with a major medical com- America (ECLA) or from the in which households are ranked ponent; on national health and Bank's adjusted data on income according to per capita household medical insurance schemes; and distribution. Those for Mexico are income, not according to their on family planning and preven- the results from the 1977 House- total household income, is supe- tive care. Also included is expen- hold Budget Survey. The esti- nor for many purposes. The dis- diture on the general administra- mates for most developing coun- tinction is important because tion and regulation of relevant tries in Asia and Africa are from households with low per capita government departments, hospi- the preliminary results of a joint incomes frequently are large tals and clinics, health and sanita- project of the World Bank and the households, whose total income tion, and the national health and Economic and Social Commission may be relatively high. Informa- medical insurance schemes. for Asia and the Pacific (ESCAP) tion on the distribution of per It must be emphasized that the or from the Bank's adjusted data capita household income exists, data presented, especially those on income distribution. The esti- however, for only a few countries. for education and health, are not mates for otherdeveloping coun- The World Bank has launched the comparable across countries for a tries are from data gathered by Living Standards Measurement number of reasons. In many the World Bank from national Study to develop procedures and countries private health and edu- sources but not adjusted. applications that can assist coun- cation services are substantial; in Data for the Netherlands and tries in improving their collection others, public services represent the United Kingdom are from and analysis of data on income the major component of total country statistical offices. Those distribution. 191 Bibliography of Data Sources National A System of National Accounts. New York: UN Department of International Economic and accounts Social Affairs, 1968. and Yearbook of National Accounts Statistics. New York: UN Department of International economic Economic and Social Affairs, various issues. indicators Statistical Yearbook. New York: UN Department of International Economic and Social Affairs, various issues. Monthly Bulletin of Statistics. New York: UN Department of International Economic and Social Affairs, various issues. Production Yearbook. Rome: FAQ, various issues. World Bank Atlas, 1980. Washington, D.C.: World Bank, 1981. World Bank data files. National sources. Energy World Energy Supplies, 1950-74, 1972-76 and 1973-78. UN Statistical Papers, Series J, nos. 19, 21 and 22. New York: UN Department of International Economic and Social Affairs, 1974, 1978 and 1979. Yearbook of World Energy Statistics, 1979. New York: UN Department of International Economic and Social Affairs, 1981. Trade Direction of Trade. Washington, D.C.: IMF, various issues. International Financial Statistics. Washington, D.C.: IMF, various issues. Handbook of International Trade and Development Statistics. New York: UN Conference on Trade and Development, various issues. Monthly Bulletin of Statistics. New York: UN Department of International Economic and Social Affairs, various issues. Yearbook of International Trade Statistics. New York: UN Department of International Economic and Social Affairs, various issues. United Nations trade tapes. Balance Balance of Payments Manual. 4th ed. Washington, D.C.: IMF, 1977. of payments, International Monetary Fund balance-of-payments data files. capital flows Development Co-operation. Paris: OECD, various annual issues. and debt World Bank Debt Reporting System. Population World Population Trends and Prospects by Country, 1950-2025: Summary Report of the 198.0 Assessment. New York: UN Department of International Economic and Social Affairs, 1980. Demographic Yearbook. New York: UN Department of International Economic and Social Affairs, various issues. United Nations population tapes. World Population: 1979. Washington, D.C.: US Bureau of the Census, International Demographic Data Center, 1980. World Bank Atlas, 1980. Washington, D.C.: World Bank, 1981. World Bank data files. Labor Labour Force Estimates and Projections, 1950-2000. 2nd ed. Geneva: ILO, 1977. force International Labour Office tapes. World Bank data files. Social Demographic Yearbook. New York: UN Department of International Economic and indicators Social Affairs, various issues. Statistical Yearbook. New York: UN Department of International Economic and Social Affairs, various issues. Compendium of Social Statistics:1977. New York: UN Department of International Economic and Social Affairs, 1980. Statistical Yearbook. Paris: UNESCO, various issues. World Health Statistics Annual. Geneva: WHO, various issues. World Health Statistics Report. Special Issue on Water and Sanitation, vol. 29, no. 10. Geneva: WHO, 1976. Government Finance Statistics Yearbook, 1980. Vol. IV. Washington, D.C.: IMF, 1980. World Bank data files. 192 The World Bank Headquarters 1818 H Street, NW. Washington, D.C. 20433, U.S.A. Telephone (202) 477-1234 Cable address: INTBAFRAD WASHINGTONDC European Office 66, avenue d'Iéna 75116 Paris, France tokyo Office Kokusai Building 1-1 Marunouchi 3chome Chiyoda-ku, Tokyo 100, Japan ISSN 0163-5085